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One Woman Faces the Consequences of Filing a Sexual Harassment Claim at Work

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Chelsea Jones* thought she’d feel relieved.

In the spring, Jones’ employer agreed to settle her claims that she was sexually harassed by her manager. The matter was handled out of court, and Jones is not allowed to discuss the terms of the settlement. She agreed to share her story with MagnifyMoney under the condition of anonymity. We have changed her name and other identifying details in this story.

Soon after her settlement was finalized, Jones tendered her resignation. It was the end of a months-long battle to convince her employer that her manager’s unrelenting advances — offers to rub her back, late night texts and weekend phone calls — were worthy of of retribution.

But it was hardly a victory. Six months later, Jones, a single mother of a young daughter, is cashing unemployment checks and struggling to find a new job. As far as she knows, her former boss is right where she left him.

“The worst part is that I second-guess myself now,” said Jones, reflecting on the harassment, which she said began after she received a promotion last year. “I’m a hard worker, and I feel like I do a good job. But what if I’m not? Was I really good, or was it always about something else?”

Coming forward

Whether the employee is a famous news anchor or an office assistant, reporting sexual harassment at work is never an easy battle to wage alone. It’s arguably more difficult for the average worker, who may not feel they have the professional clout or the financial means to take action. Workers filed roughly 6,800 sexual harassment charges through the Equal Employment Opportunity Office in 2015, down 14% since 2010.

For Jones, speaking up was only the first of many challenges she faced. While her attorney squared off against her company’s legal team behind closed doors, she continued coming to work each day, where she said she was subjected to an increasingly hostile environment.

Even filing a simple human resources complaint can be rife with complications, exposing workers to forms of retaliation that, while illegal, can make it difficult to muster the willpower to keep fighting.

“[Workers] can be fired or suffer other consequences,” said Gary Young, an attorney who specializes in workplace harassment issues at the business law firm Scarinci Hollenbeck. “Even if you have your day in court and are vindicated, it can be a long road and it’s tough to go through the process.”

No one understands that process better than Jones.

Jones was in her late 20s when she started working for the Boston-area firm in 2013. For Jones, it was something of a professional comeback. She had recently ended a marriage and went back to school to earn her Associate’s Degree. She was thrilled to be hired and eagerly accepted a promotion a couple of years later.

The new title came with a higher salary and, she soon discovered, an increasing amount of unwanted attention from her boss.

“We were at a conference together, and he was offering to give me a back massage, to put his arms around my shoulders,” said Jones, now 30. The advances continued for months. According to Jones, her manager insisted on buying her gifts on her birthday and began texting her late at night and on weekends. She asked her manager to stop his advances, to no avail.

Worried that her coworkers would get the wrong impression about their relationship, Jones decided to report his behavior to her human resources manager.

“I was hoping to resolve the issue [through HR], and change my position so I was no longer sitting outside of his office,” Jones told MagnifyMoney. “My goal wasn’t to file a lawsuit.”

Dead-ends and demotions

Illustration: Kelsey Wroten for MagnifyMoney
Illustration: Kelsey Wroten for MagnifyMoney

HR proved to be a dead end. As a solution, her HR manager offered to put Jones in an administrative role in another part of the company. The new job would have moved her out from under her manager’s purview, but it was effectively a demotion.

She turned the offer down. In the ensuing weeks, her boss increasingly began cutting back her job duties, she said. He yanked her budget for a previously approved work project. She was told she could no longer use support staff to see the project through.

At a loss for what to do, Jones posted a message on a Facebook support group for single working moms. A member referred her to an employment attorney in her area, who offered her a free consultation.

“He said I’m young and if I file a lawsuit it will become public record and it could hurt my future employment,” Jones said. She agreed to give it another try with HR.

When she submitted another complaint, Jones said she received a warning: HR had noticed her performance was slipping and her colleagues were complaining. It was clear she was getting nowhere.

Jones went back to the attorney, who agreed to take her case. The attorney compiled all of Jones’ allegations — she had documented every unwanted advance, phone call and text message from her manager over the years — and sent a letter to her company informing them of the pending lawsuit.

“Once [my boss] got the letter, obviously it made everything way more hostile,” she said. “He didn’t speak a single word to me. I was going [to work each day] having no work to do. Then they started putting me on odds and end jobs not even related to what I was supposed to do there.”

She considered quitting, but Jones’ attorney encouraged her to hang tight.

It can in some cases help workers in sexual harassment cases if they keep working, said Paula Brantner, an attorney with Workplace Fairness, a non-profit that promotes employee rights, says . “First of all, you are required to give the company a chance to rectify the problem,” Bratner said. Quitting before a complaint is resolved can also remove some of the bargaining power in settlement negotiations. Companies are often eager to keep matters like sexual harassment under wraps.

Staying on the job can also give workers the opportunity to keep track of any retaliatory behavior. Workplace harassment lawsuits are often stronger if workers can prove their employer retaliated against them after they took matters to human resources. In Jones’ case, she was offered a demotion and her job duties shrank.

“Even if the initial harassment claim fails, the retaliation claim can subject the employer to as much or more liability as the underlying harassment claim,” said Brantner. “Judges and juries don’t like to see people [follow proper protocol], only to be subjected to more injustice.”

When her attorney reached a settlement with her employer, Jones decided to accept.

“One of the reasons I accepted a settlement instead of going to trial is that I didn’t want to be publicly seen as a woman who files these claims,” she said.

Her allegations will never be made public, but the ordeal has effectively stymied the beginning of what was a promising new career. Jones is still looking for a new job.  She worries about using her former employer as a professional reference, despite the fact that it was her first significant job in her chosen profession. While she continues her job search, Jones is studying part-time to complete her Bachelor’s degree. Under the terms of her settlement, she was entitled to collect unemployment benefits, which has given her a bit of a financial cushion. Her settlement award remains in a savings account, untouched.

“My goal with the settlement wasn’t just to get some payday,” she said. “I’d like to think it was enough to make him stop [doing this to other women].”

Handling harassment at work

We’ve spoken with legal experts and put together some tips for workers who feel they are facing harassment at work.

Identify the unwelcome behavior. Brantner, who has represented workers in harassment lawsuits, says the first thing to do is to recognize when you are being sexually harassed. She says sexual harassment is defined as unwelcome sexual advances or verbal or physical conduct of a sexual nature that is made explicitly or implicitly a term of your employment. It can also be conduct that interferes with your work or creates a hostile work environment.

Report the behavior to your human resources department or other supervisor. When you’ve identified the unwelcome behavior, Brantner says the next step is to report it and ask that it stop. “If the behavior continues after you have clearly communicated that you wish it to stop, you need to decide if you wish to take further action,” she says.

Document everything. If you want to bolster your case, Young suggests documenting any evidence of harassment. Keep a log that includes dates and times, as well as descriptions of the offensive behavior. Note your attempts to speak with human resources and the outcomes. Save emails and written notes to back you up. In some states it is illegal to record conversations without the other person’s knowledge, so check your state’s laws or consult an attorney before you take that route.

Be on alert for any form of retaliation. Speaking up about harassment in the workplace can trigger retaliatory behavior from colleagues. It’s important to keep close track of anything your colleagues may do in order to undermine your position after you have spoken up about harassment. The person you are accusing of harassment might try to make it difficult for you to do your job, or, in Jones’ case, demote you or remove your job duties. Document these instances carefully in order to support your case.

If your employer doesn’t act, contact a lawyer or the EEOC. If you aren’t getting results with your employer, Young recommends visiting the Equal Employment Opportunity Commission (EEOC) website to learn about filing a charge. You can use the EEOC’s assessment tool to get a better idea of what to expect. It takes about five minutes to use the tool, and you will be directed as to your next course of action. Some states have rules on how much time can go by before harassment suits are filed. The EEOC can help you expedite the process if needed.

Money doesn’t have to mean everything. Even if you don’t have unlimited financial resources to hire a legal team, you still have options. Many lawyers will take on workplace harassment cases on a contingency basis, which means they are paid once you have a settlement or win the lawsuit. For example, Jones’ attorney accepted a percentage of her settlement earnings as payment and collected no other fees. If you file with the EEOC or the Department of Labor, or with the appropriate office in your state, the government will investigate if there is probable cause to pursue a lawsuit.

Edited by Mandi Woodruff
Illustrations by Kelsey Wroten

*Names, dates and locations have been changed. 

Mandi Woodruff
Mandi Woodruff |

Mandi Woodruff is a writer at MagnifyMoney. You can email Mandi at mandi@magnifymoney.com

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Confessions of a Side Hustler: How Full-Time Workers Keep Their Side Gigs a Secret

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Many Americans are juggling extra gigs on top of their regular nine-to-five. According the Bureau of Labor Statistics, about 7.5 million Americans held more than one job in 2016. The figure rose by more than 300,0000 workers from the previous year, due in part to years of stagnant wages, a competitive labor market and the growth of the gig-economy. Of the multiple job holders, more than half, or 4.1 million, split their time between a full-time and part-time gig.

Having a side gig waiting tables after work is one thing. It’s when workers decide to turn their side hustle into a full-time business that things can get complicated.

For budding entrepreneurs, it can make sense to continue working full time until their new venture business is up and running. A full-time job provides a certain level of stability — like a consistent salary, health care, and other benefits.

Knowing when and if to disclose your new business with your employer is the hard part. For that reason, some entrepreneurs choose to keep their secret side hustle just that — a secret.

Some experts say an employer should know if you have any business interests outside of your daily work responsibilities. Others argue what you do on your free time is none of your employer’s business so long as you aren’t using company time or resources.

“Some employers really encourage their employees to work on side businesses because it stimulates creativity,” says Jill Jacinto, a millennial career expert at Manhattan-based career consultancy firm WORKS. On the other hand, she adds, some employers “might feel you are neglecting your current job or getting ready to make a move elsewhere.”

Beyond feeling ostracized by fellow workers or their employers, there are also potential legal conflicts or consequences to worry about, says Bruce Eckfeldt, founder of Eckfeldt & Associates, a business coaching and management training firm based in New York City and a master coach for career-assistance company, The Muse.

“Before you invest a bunch of time in your startup, make sure that your current employment agreement isn’t going to be a problem,” he says. If you happen to be launching a business in the same field as your current employer, there may be restrictions outlined in your contract that could come back to bite you.

In addition, you should do your very best to separate your new business from your day job as best you can. Separating your time and focus is a little more obvious — don’t work on your startup at your job — but you may also need to create some physical boundaries too.

“Build a solid wall between the work you do for you employer and for your startup. Separate email address, file repositories, maybe even computers and profiles if you’re really careful,” says Eckfeldt. He says this adds a physical level of separation between your day job and your startup. It also protects you against any claims you have used work time or resources on your startup. Doing so is common for many starting out, but generally considered unprofessional, and could breach the terms of your employment contract.

We interviewed several full-time workers who are secretly juggling side businesses along with their 9-to-5. We asked about their motivations, how they keep their other job under wraps, and the toll it has taken on their professional lives. To protect their identities (and their livelihoods), we have changed several of their names.

Here’s what it’s really like to live a double work life.

“I sell live crickets on the side.”

By day, Jason*, 32, is a project manager for a paint and flooring company in York, Pa.

After work, he puts on a much different hat as a pet food distributor. But he doesn’t sell Kibble ‘n Bits. His website, The Critter Depot, sells live crickets, which pet owners purchase in bulk to feed pets like snakes and large reptiles. Jason also operates a couponing blog under a pseudonym “Jason” and picks up Craigslist gigs in his free time.

“I like to get income from many sources, so I side-hustle,” Jason tells MagnifyMoney.

The husband and soon-to-be father of three says his ultimate goal is to retire as soon as possible. He plans to keep taking on extra work as long as he can manage it. He calls his full-time job “the bedrock” of his retirement plan.

“The full-time job, that’s the bedrock. That’s the foundation. If I had to sacrifice the other three [businesses], I would make sure I kept my full-time job,” says Jason. “Even if my side hustles got to the point where they were pulling in six figures alone, I wouldn’t get rid of my full-time job.”

On why he doesn’t tell his employer about his other income streams, Jason says he doesn’t want to blur the lines between his different businesses.

He’s careful to focus only on office work during office hours, and on his businesses when he’s at home. He doesn’t want to risk losing any trust at work.

“I don’t want [my boss] to think maybe I’m too zoned in on my side projects and not zoned in enough on my at-office projects,” he says.

For him, keeping his job in addition to the side income streams is all about keeping his family afloat.

“If I were a bachelor, I’d say you’ve got to put every ounce of your time into it. But the father in me says you’ve got to be level-headed because it’s not just you that’s relying on [your income], your whole family is relying on it.”

“I’m a travel agent when I’m not working on Wall Street.”

While Fred*, 45, was working at an investment firm in New York City, he developed an idea for a travel business. In 2009, he launched YLime, a concierge service that helps organize group trips for Americans looking to book travel to various countries for annual Carnival celebrations. Recently, he expanded his offerings to include travel packages to some African countries and wine tours on Long Island, N.Y.

His reasons for keeping his side business under wraps are simple: his workplace frowns upon employees having outside income.

“I’ve been on Wall Street for about 20 years now, and there is a certain culture in here. If they see you doing something else, it limits your growth,” he says. “They are not going to consider you for those positions because they assume you’ve already checked out to a certain extent.”

Although he says his company isn’t a conflict of interest for his position, he would be concerned if his higher-ups knew about YLime.

“Depending on your relationship with some people in the firm, some people may try to use that information against you,” Fred says.

“My bosses found out about my secret trucking business from a local news reporter.”

After a management shake-up at the Las Vegas gaming company where she had worked for a decade, 41-year-old project manager Marcella Williams thought her days were numbered.

Fearing she might lose her job, she decided to use her project management skills to open her own business on the side as a backup.

She launched CDL Focus, a truck rental and shipping company, in mid-2015. She rents two semi-trucks, primarily to people looking to obtain a commercial driver’s license. They can use her trucks to practice driving or to take the licensing test without going through an employer to gain access to a truck. Williams employs a driver for the other part of her business, which focuses on shipping.

She spent nearly $130,000 of her own savings and salary to bootstrap the business. In its early days, she admits it was hard to focus 100% on her day job while trying to get CDL Focus off the ground.

“The truth is, I probably spent a lot more time especially in the beginning working on the business than on my job,” says Williams. She gave her full-time job assignments priority and would shift her focus once her regular duties were completed, she says.

Williams recalls a time a potential truck client called her in the middle of a meeting with her supervisor.

“I’ve been in a meeting with my boss and my phone is ringing off the hook and he’s like, ‘do you need to get that?’” she says. In those cases, Williams says she tries to take the call after hours or send an prewritten reply so that she can respond later.

“You want to run your business and stay on top of it, but when you have a one- to two-hour conference call or meeting, you have to decide: are you going to screw over the person who is paying you?” she says.

After almost two years in operation, Williams caught the attention of a local reporter who wrote about her new venture. It wasn’t long before her employers found out.

The same day, her supervisor asked her into his office to be sure she wasn’t going to quit.

Now, she says, “[my co-workers] ask me ‘how is your trucking company going?’ in the middle of cubicle land.”

“I flip houses and sell bounce castles, and my employers have no idea.”

Austin, Texas-based Dennis* says he hasn’t quite mastered the ability to focus on his full-time job and ignore his side business until after work hours. The 31-year-old works as a logistics manager for a large technology company. About a year and a half ago, he and his wife took their savings and launched a real estate investing business.

Dennis and his wife buy, renovate, and resell homes. They learned the basics of house-flipping from a well-known investor in Austin. “Our first year we did 13 transactions,” says Dennis.

Excluding education and other startup costs, Dennis and his wife got into the market with $1,000 in direct mail advertising and about $15,000 spent fixing up their first property. They now earn between $20,000 and $50,000 on each home they flip. The couple says they brought in about $65,000 in 2016.

In 2016, Dennis also launched a pair of e-commerce stores, which sell bounce houses for children and clothing and accessories.

“I work on all three [projects] while I’m at my day job so it is hard, especially trying to keep everything a secret and not having co-workers see what I am truly working on,” Dennis says. “I know that I am not fulfilling my primary duties at my full-time job to the fullest extent of my abilities.”

To make things easier, the couple has hired a call center to take and record all calls from the real estate business, which are then addressed after Dennis comes home from work. He says he will do the same for the e-commerce stores as business grows.

His ultimate goal is to build up enough passive income to replace his corporate income. For now, he keeps his job for financial security, while he grows his e-commerce portfolio and his and his wife’s real estate business.

“The salary and stock incentives that we have right now are kind of hard to walk away from unless I had sufficient passive income that would replace what I have now,” he reasons. He has given himself two years to grow his businesses into self-sustaining operations. At that point, his stock in the company will be fully vested, and he can consider leaving for good.

“I’ve been blessed. I have a good education, and I’ve always had a good job, but ultimately my main goal in life is to be independent and not have to do the corporate grind,” he says.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Debt Buyers Reveal Just How Far They’re Willing to Go to Settle Unpaid Debts

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Tens of millions of Americans are pursued by debt buyers, speculators who buy the rights to collect their overdue bills. Yet few consumers realize this growing segment of the collection industry may offer them a chance to slash their delinquent debts by as much as 75%.

A MagnifyMoney investigation examined the business practices of debt buyers as detailed in disclosures to their investors. Here’s how the game is played:

  • Buyers purchase massive bundles of unpaid consumer debts with face values that often total billions of dollars. Those are the bills that banks, credit card companies, and other creditors give up trying to collect.
  • Those debts are bought at deeply discounted prices, averaging roughly 8 cents on the dollar.
  • The buyers only expect to recover a fraction of the original amounts owed. Their target is to recover from 2 to 3 times more than they paid.

The bottom line: Debt buyers can turn profits that meet their goals by collecting merely 16% to 24% of the original face values. That knowledge can be useful to savvy debtors who choose to negotiate a settlement for less.

Debt buyers “absolutely” have more flexibility in negotiating with consumers, says Sheryl Wright, senior vice president of Encore Capital Group, the nation’s largest debt buyer. Encore offers most debtors a 40% discount to settle, according to the company’s website.

“There could be an advantage in terms of negotiating a favorable settlement,” says Lisa Stifler of the Center for Responsible Lending, a nonprofit consumer advocate. “Debt buyers are willing to – and generally do – accept lower amounts.”

Stifler warned that debtors should be cautious in all interactions with debt buyers and collectors. (See “Tips to fight back against debt buyers and debt collectors” later in this article.)

In the world of debt buying, the numbers can vary. The price of bad debt portfolios ranged from 5 to 15 cents on the dollar during the past two years, according to corporate disclosures of debt buyers. The variables include the age of debt, size of account, type of loan, previous collection attempts, geographic location, and data about debtors – plus shifts of supply and demand in the bad debt marketplace.

What remains constant is the debt buyers’ goal of recovering 2 to 3 times more than the purchase price they pay for the accounts.

It is a different business model than that of traditional debt collection agencies, contractors that pursue bills for a percentage of what they recover. In contrast, debt buyers may often be more willing to wheel and deal to settle accounts with consumers.

Debt buyers raked in $3.6 billion in revenue last year – about one-third of the nation’s debt collections, according to the Consumer Financial Protection Bureau’s latest annual report.

Information is scarce on the inner workings of hundreds of debt buyers who operate in the U.S. An accurate count is not available since only 17 states require buyers to be licensed.

Of the more than 575 debt buyers that belong to the industry’s trade association, only three are publicly traded entities required to file disclosures last year with the federal Securities and Exchange Commission. MagnifyMoney looked into reports from two of those companies and found telling insights into an industry typically secretive about its practices.

An “Encore” of unpaid bills

Encore owns nearly 36 million open accounts of consumer debt in the U.S. through its subsidiaries Midland Credit Management, Midland Funding, Asset Acceptance, and Atlantic Credit & Finance.

During 2016, Encore invested $900 million to buy debt with a face value of $9.8 billion – or 9 cents per dollar. On average, the corporation recovers 2.5 times more than it pays for debt portfolios – the equivalent of 22.5 cents per dollar owed, according to its annual report to the SEC.

In that disclosure, the San Diego-based operation details how it tries to get debtors to pay.

Encore boasts that its proprietary “decision science” enables it “to predict a consumer’s willingness and ability to repay his or her debt.” It obtains “detailed information” about debtors’ “credit, savings or payment behavior,” then analyzes “demographic data, account characteristics and economic variables.”

“We pursue collection activities on only a fraction of the accounts we purchase,” stated Encore. “Consumers who we believe are financially incapable of making any payments … are excluded from our collection process.”

The rest of the debtors can expect to hear from Encore’s collectors. But the company knows most won’t respond.

“Only a small number of consumers who we contact choose to engage with us,” Encore explained. “Those who do are often offered discounts on their obligations or are presented with payment plans that are intended to suit their needs.”

While the company offers most debtors discounts of 40% to settle, relatively few take advantage of that opportunity.

“The majority of consumers we contact do not respond to our calls and letters, and we must then make the decision about whether to pursue collection through legal action,” Encore stated. In its annual report, the company disclosed it spent $200 million for legal costs last year.

In a written response to questions from MagnifyMoney, Encore refused to reveal the number of lawsuits it has filed or the amount of money it has recovered as a result of that litigation.

“We ultimately take legal action in less than 5% of all of our accounts,” says Wright. If Encore has sued 5% of its 36 million domestic open accounts, the total would be roughly 1.8 million court cases.

Portfolio Recovery Associates has acquired a total of 43 million consumer debts in the U.S. during the past 20 years. Behind Encore, it ranks as the nation’s second-largest debt buyer.

Its parent company, PRA Group Inc. of Norfolk, Va., paid $900 million last year to buy debts with a face value of $10.5 billion – or 8 cents on the dollar, according to its 2016 annual report. Its target is to collect a multiple of 2 to 3 times what it paid.

It is a high-stakes investment. The company must satisfy its own creditors since it borrows hundreds of millions of dollars to buy other people’s unpaid debts. PRA Group reported $1.8 billion in corporate indebtedness last year.

PRA Group declined an opportunity to respond to questions from MagnifyMoney. In lieu of an interview, spokeswoman Nancy Porter requested written questions. But the company then chose not to provide answers.

Asta Funding Inc., the only other publicly traded debt buyer, did not respond to interview requests from MagnifyMoney.

Tips to fight back against debt buyers and debt collectors

All types of bill collectors have a common weakness: They often know little about the accounts they chase. And that’s a primary reason for many of the 860,000 consumer complaints against collectors last year, according to a database kept by the Federal Trade Commission.

Be sure the debt is legitimate first

In dealing with collectors, you should begin by questioning whether the debt is legitimate and accurate. You can also ask who owns the debt and how they obtained the right to collect it.

In 2015, Portfolio agreed to pay $19 million in consumer relief and $8 million in civil penalties as a result of an action by the CFPB.

“Portfolio bought debts that were potentially inaccurate, lacking documentation or unenforceable,” stated the CFPB. “Without verifying the debt, the company collected payments by pressuring consumers with false statements and churning out lawsuits using robo-signed court documents.”

One unemployed 51-year-old mother in Kansas City, Mo. fought back and won a big judgment in court.

Portfolio mistakenly sued Maria Guadalujpe Mejia for a $1,100 credit card debt owed by a man with a similar sounding name. Despite evidence it was pursuing the wrong person, the company refused to drop the lawsuit.

Mejia countersued Portfolio. Outraged by the company’s bullying tactics, a court awarded her $83 million in damages. In February, the company agreed to settled the case for an undisclosed amount.

Challenge the debt in writing

Within 30 days of first contact by a collector, you have the right to challenge the debt in writing. The collector is not allowed to contact you again until it sends a written verification of what it believes you owe.

Negotiate a settlement

If the bill is correct, you can attempt to negotiate a settlement for less, a sometimes lengthy process that could take months or years. By starting with low offers, you may leave more room to bargain.

Communicate with collectors in writing and keep copies of everything. On its website, the CFPB offers sample letters of how to correspond with collectors.

As previously noted, debt buyers generally have more leeway to negotiate settlements since they actually own the accounts. A partial list of debt buyers can be found online at DBA International.

In contrast, collection agencies working on contingency may be more restricted in what they can offer. They need to collect enough to satisfy the expectations of creditors plus cover their own fee.

As part of a settlement, the debt buyer or collector may offer a discount, a payment plan allowing the consumer to pay over time, or a combination of the two.

“Through this process, we use a variety of options, not just one approach or another, to create unique solutions that help consumers work toward long-term financial well-being and improve their quality of life,” says Encore’s Wright.

A settlement doesn’t guarantee the debt will be scrubbed from your credit report

To encourage settlements, Encore recently announced that it would remove negative information from the credit reports of consumers two years after they paid or settled their debts. Traditionally, the negative “tradelines” remain on credit reports for seven years.

“We believe the changes in our credit reporting policy provide a tangible solution to help our consumers move toward a better life,” says Wright.

However, Encore’s new policy does nothing to speed up the removal of any negative information reported by the original creditor from whom the company bought the debt.

Check your state’s statute of limitations on unpaid debts

Before any payment or negotiation, check to see if the statute of limitations has expired on the debt. That is the window of time for when you can be sued; it varies from state to state and generally ranges from three to six years.

If the statute of limitations on your debt has expired, you may legally owe nothing. If the expiration is nearing, you can have extra leverage in negotiating a settlement. But be careful: A partial payment can restart the statute in some states and lengthen the time a black mark remains on your credit record.

Respond promptly if the company decides to sue

If you are sued over the debt, be sure to respond by the deadline specified in the court papers. If you answer, the collector will have to prove you owe the money.

If you don’t timely answer the complaint, the burden of proof may switch to you. A judge may enter a default judgment against you – or even sign a court order to garnish your paycheck.

Seek help from a lawyer or legal aid service if you have questions, but be careful of where you turn for help. The CFPB warns consumers to be wary of debt collection services that charge money in advance to negotiate on your behalf. They often promise more than they can deliver and get paid no matter what happens.

Mandi Woodruff
Mandi Woodruff |

Mandi Woodruff is a writer at MagnifyMoney. You can email Mandi at mandi@magnifymoney.com

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How Consumers Can Negotiate With Debt Buyers and Settle Their Debt for Less

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Tens of millions of Americans are pursued by debt buyers, speculators who buy the rights to collect their overdue bills. Yet few consumers realize this growing segment of the collection industry may offer them a chance to slash their delinquent debts by as much as 75%.

A MagnifyMoney investigation examined the business practices of debt buyers as detailed in disclosures to their investors. Here’s how the game is played:

  • Buyers purchase massive bundles of unpaid consumer debts with face values that often total billions of dollars. Those are the bills that banks, credit card companies, and other creditors give up trying to collect.
  • Those debts are bought at deeply discounted prices, averaging roughly 8 cents on the dollar.
  • The buyers only expect to recover a fraction of the original amounts owed. Their target is to recover from 2 to 3 times more than they paid.

The bottom line: Debt buyers can turn profits that meet their goals by collecting merely 16% to 24% of the original face values. That knowledge can be useful to savvy debtors who choose to negotiate a settlement for less.

Debt buyers “absolutely” have more flexibility in negotiating with consumers, says Sheryl Wright, senior vice president of Encore Capital Group, the nation’s largest debt buyer. Encore offers most debtors a 40% discount to settle, according to the company’s website.

“There could be an advantage in terms of negotiating a favorable settlement,” says Lisa Stifler of the Center for Responsible Lending, a nonprofit consumer advocate. “Debt buyers are willing to – and generally do – accept lower amounts.”

Stifler warned that debtors should be cautious in all interactions with debt buyers and collectors. (See “Tips to fight back against debt buyers and debt collectors” later in this article.)

In the world of debt buying, the numbers can vary. The price of bad debt portfolios ranged from 5 to 15 cents on the dollar during the past two years, according to corporate disclosures of debt buyers. The variables include the age of debt, size of account, type of loan, previous collection attempts, geographic location, and data about debtors – plus shifts of supply and demand in the bad debt marketplace.

What remains constant is the debt buyers’ goal of recovering 2 to 3 times more than the purchase price they pay for the accounts.

It is a different business model than that of traditional debt collection agencies, contractors that pursue bills for a percentage of what they recover. In contrast, debt buyers may often be more willing to wheel and deal to settle accounts with consumers.

Debt buyers raked in $3.6 billion in revenue last year – about one-third of the nation’s debt collections, according to the Consumer Financial Protection Bureau’s latest annual report.

Information is scarce on the inner workings of hundreds of debt buyers who operate in the U.S. An accurate count is not available since only 17 states require buyers to be licensed.

Of the more than 575 debt buyers that belong to the industry’s trade association, only three are publicly traded entities required to file disclosures last year with the federal Securities and Exchange Commission. MagnifyMoney looked into reports from two of those companies and found telling insights into an industry typically secretive about its practices.

Willing to Settle for Less

Encore owns nearly 36 million open accounts of consumer debt in the U.S. through its subsidiaries Midland Credit Management, Midland Funding, Asset Acceptance, and Atlantic Credit & Finance.

During 2016, Encore invested $900 million to buy debt with a face value of $9.8 billion – or 9 cents per dollar. On average, the corporation recovers 2.5 times more than it pays for debt portfolios – the equivalent of 22.5 cents per dollar owed, according to its annual report to the SEC.

In that disclosure, the San Diego-based operation details how it tries to get debtors to pay.

Encore boasts that its proprietary “decision science” enables it “to predict a consumer’s willingness and ability to repay his or her debt.” It obtains “detailed information” about debtors’ “credit, savings or payment behavior,” then analyzes “demographic data, account characteristics and economic variables.”

“We pursue collection activities on only a fraction of the accounts we purchase,” stated Encore. “Consumers who we believe are financially incapable of making any payments … are excluded from our collection process.”

The rest of the debtors can expect to hear from Encore’s collectors. But the company knows most won’t respond.

“Only a small number of consumers who we contact choose to engage with us,” Encore explained. “Those who do are often offered discounts on their obligations or are presented with payment plans that are intended to suit their needs.”

While the company offers most debtors discounts of 40% to settle, relatively few take advantage of that opportunity.

“The majority of consumers we contact do not respond to our calls and letters, and we must then make the decision about whether to pursue collection through legal action,” Encore stated. In its annual report, the company disclosed it spent $200 million for legal costs last year.

In a written response to questions from MagnifyMoney, Encore refused to reveal the number of lawsuits it has filed or the amount of money it has recovered as a result of that litigation.

“We ultimately take legal action in less than 5% of all of our accounts,” says Wright. If Encore has sued 5% of its 36 million domestic open accounts, the total would be roughly 1.8 million court cases.

Portfolio Recovery Associates has acquired a total of 43 million consumer debts in the U.S. during the past 20 years. Behind Encore, it ranks as the nation’s second-largest debt buyer.

Its parent company, PRA Group Inc. of Norfolk, Va., paid $900 million last year to buy debts with a face value of $10.5 billion – or 8 cents on the dollar, according to its 2016 annual report. Its target is to collect a multiple of 2 to 3 times what it paid.

It is a high-stakes investment. The company must satisfy its own creditors since it borrows hundreds of millions of dollars to buy other people’s unpaid debts. PRA Group reported $1.8 billion in corporate indebtedness last year.

PRA Group declined an opportunity to respond to questions from MagnifyMoney. In lieu of an interview, spokeswoman Nancy Porter requested written questions. But the company then chose not to provide answers.

Asta Funding Inc., the only other publicly traded debt buyer, did not respond to interview requests from MagnifyMoney.

Tips to fight back against debt buyers and debt collectors

All types of bill collectors have a common weakness: They often know little about the accounts they chase. And that’s a primary reason for many of the 860,000 consumer complaints against collectors last year, according to a database kept by the Federal Trade Commission.

Be sure the debt is legitimate

In dealing with collectors, you should begin by questioning whether the debt is legitimate and accurate. You can also ask who owns the debt and how they obtained the right to collect it.

In 2015, Portfolio agreed to pay $19 million in consumer relief and $8 million in civil penalties as a result of an action by the CFPB.

“Portfolio bought debts that were potentially inaccurate, lacking documentation or unenforceable,” stated the CFPB. “Without verifying the debt, the company collected payments by pressuring consumers with false statements and churning out lawsuits using robo-signed court documents.”

One unemployed 51-year-old mother in Kansas City, Mo. fought back and won a big judgment in court.

Portfolio mistakenly sued Maria Guadalujpe Mejia for a $1,100 credit card debt owed by a man with a similar sounding name. Despite evidence it was pursuing the wrong person, the company refused to drop the lawsuit.

Mejia countersued Portfolio. Outraged by the company’s bullying tactics, a court awarded her $83 million in damages. In February, the company agreed to settled the case for an undisclosed amount.

Challenge the debt in writing

Within 30 days of first contact by a collector, you have the right to challenge the debt in writing. The collector is not allowed to contact you again until it sends a written verification of what it believes you owe.

Negotiate a settlement

If the bill is correct, you can attempt to negotiate a settlement for less, a sometimes lengthy process that could take months or years. By starting with low offers, you may leave more room to bargain.

Communicate with collectors in writing and keep copies of everything. On its website, the CFPB offers sample letters of how to correspond with collectors.

As previously noted, debt buyers generally have more leeway to negotiate settlements since they actually own the accounts. A partial list of debt buyers can be found online at DBA International.

In contrast, collection agencies working on contingency may be more restricted in what they can offer. They need to collect enough to satisfy the expectations of creditors plus cover their own fee.

As part of a settlement, the debt buyer or collector may offer a discount, a payment plan allowing the consumer to pay over time, or a combination of the two.

“Through this process, we use a variety of options, not just one approach or another, to create unique solutions that help consumers work toward long-term financial well-being and improve their quality of life,” says Encore’s Wright.

A settlement doesn’t guarantee the debt will be scrubbed from your credit report

To encourage settlements, Encore recently announced that it would remove negative information from the credit reports of consumers two years after they paid or settled their debts. Traditionally, the negative “tradelines” remain on credit reports for seven years.

“We believe the changes in our credit reporting policy provide a tangible solution to help our consumers move toward a better life,” says Wright.

However, Encore’s new policy does nothing to speed up the removal of any negative information reported by the original creditor from whom the company bought the debt.

Check your state’s statute of limitations on unpaid debts

Before any payment or negotiation, check to see if the statute of limitations has expired on the debt. That is the window of time for when you can be sued; it varies from state to state and generally ranges from three to six years.

If the statute of limitations on your debt has expired, you may legally owe nothing. If the expiration is nearing, you can have extra leverage in negotiating a settlement. But be careful: A partial payment can restart the statute in some states and lengthen the time a black mark remains on your credit record.

Respond promptly if the company decides to sue

If you are sued over the debt, be sure to respond by the deadline specified in the court papers. If you answer, the collector will have to prove you owe the money.

If you don’t timely answer the complaint, the burden of proof may switch to you. A judge may enter a default judgment against you – or even sign a court order to garnish your paycheck.

Seek help from a lawyer or legal aid service if you have questions, but be careful of where you turn for help. The CFPB warns consumers to be wary of debt collection services that charge money in advance to negotiate on your behalf. They often promise more than they can deliver and get paid no matter what happens.

Mandi Woodruff
Mandi Woodruff |

Mandi Woodruff is a writer at MagnifyMoney. You can email Mandi at mandi@magnifymoney.com

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7 Ways to Grow Your Net Worth — Earn More, Owe Less

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

The more than 75 million young adults that make up the millennial generation had a lot against them as they entered adulthood. The largest and most diverse generational cohort came of age during the financial crisis. They pursued higher education at a higher rate than the two generations before them despite skyrocketing education costs, and many older millennials faced a tough job market upon graduation.

The financial crisis coincided with a boom in college and graduate school attendance. This wasn’t much of a surprise, considering education has always been considered a reliable way to increase wealth. However, a recent study by the Young Invincibles found that despite being the most college-educated generation in history, the average millennial’s net worth is still half of what the average baby boomer’s net worth was at the same age.

To explain why, the Young Invincibles looked at how an increase in student loan debt and average wages has worked against college graduates. According to the results of the study, millennials are not just being held back by student loan debt — about $27,000 on average — but they are also earning an average of 20% less than boomers earned at the same age.

Why all the concern over millennials’ net worth? We’ll explain why your net worth matters and what you can do it increase it.

What Is Net Worth?

Your net worth is fairly simple to determine. It’s what you have left over after adding up the assets you own and the debt and other financial liabilities you have as well.

In short, it’s how much you own versus how much you owe.

Your assets are a combination of the cash you have in the bank, investable assets like your 401(k) or investments in the stock market, and the current value of your home and your car.

Your liabilities are your debts. That’s essentially everything that pops up on your credit report like credit card debt, student loan debt, auto loan or mortgage (yes, equity you have built in your home is an asset, but the mortgage you took out to buy the home is a financial liability).

Calculate your net worth by subtracting your total liabilities from your total assets.

For example, you could be a doctor earning $300,000 a year, with $80,000 in savings and $100,000 in your retirement account, but if you have a mortgage worth $400,000, $130,000 in student loans to pay off, and $10,000 in credit card debt, you would have a negative net worth. ($180,000 – $540,000 = -$360,000)

How to Increase Your Net Worth

Hate to break it to you, but outside of receiving a large unexpected inheritance, there is no quick fix to growing your net worth.

However, as a millennial, time is on your side.

“Building up your financial situation takes time, a good plan, and a lot of persistence,” says Peter J. Creedon, a certified financial planner at Crystal Brook Advisors in Mt. Sinai, N.Y. “Life is about choices, and good behaviors take time to form and discipline to adhere to.”

Follow these six tips to grow your net worth:

1. Work with What You Have

So, you’re saddled with student loan debt and earning 20% less than your parents’ generation, but you’re determined to grow your net worth. It may be time to make like Beyonce and turn lemons into lemonade.

“Millennials can’t change their college debt situation and may not be able to increase the wages from their full-time job,” says David J. Haas of Cereus Financial in Franklin Lakes, N.J. “So the important thing is careful money management to make the most of what they do have.”

Practicing a daily budget is an excellent first step toward increasing your net worth. If you can master the practice of spending less than you earn each day, then each week, each month, and eventually each year, you’re on your way to a higher net worth.

If you’re not into calculators and spreadsheets, there’s good news: It’s never been easier to use technology to do the hard work for you.

By automatically scheduling savings to disperse to different goals such as an emergency fund or retirement savings, “millennials can train themselves to live on less while building their net worth a little bit at a time,” says Daniel Andrews, a financial adviser at Well-Rounded Success in Greenwood VIllage, Colo.

2. Look for a job with growth potential

If you went to college and took on student debt like many millennials, chances are high that your net worth will be in the red. If that’s the case, you should focus on creating a plan to earn more and owe less over time says Allison Vanaski, a financial planner with Arcadia Wealth Management in Smithtown, N.Y.

“You shouldn’t be worried if you are young and have a negative net worth, but you should be worried if you don’t have a plan [to grow your net worth over time],” Vanaski says.

By focusing on increasing your earnings over time, you’ll have more cash on hand to pay down your debts and build up your cash reserves. All the while, you’re laying groundwork for a higher net worth.

Ask yourself if you’re in a position with room for growth or increased income because that is a surefire way to increase your net worth. If you’re not, it could be time to look for a job with more opportunity for growth.

3. Take Advantage of Your Employer Benefits

One of the easiest things you can do to increase your net worth is to maximize employer benefits like a 401(k) match, flexible spending account, or health savings account.

Roger Ma is a New York-based financial planner at Life Laid Out. He says to maximize your retirement contributions to fully take advantage of any 401(k) match you get from your employer. This is like getting a guaranteed return on your retirement investments — for free.

To put this in practice, imagine your employer matches 50% of what you contribute to retirement up to 5%. At the very least, you should set aside 5% of each paycheck for your 401(k) to capture the full match.

Flexible spending or health savings accounts can seem intimidating to figure out, but they are a great way to save on health care expenses. Health care is only getting more expensive each year, and it can quickly eat away at your budget. When you put money into an FSA or HSA, you’re doing so with pre-tax dollars, giving you extra money for those costs.

Even little perks like commuter benefits can add up over time. Those accounts allow you to use pre-tax dollars to pay for transportation costs.

4. Get a Side Hustle

You might find an excellent job with great upward mobility but still not feel like you’re earning quite enough to be able to pay down your debts. Leaving your job may not be the answer if you feel you have potential to grow and earn more there. Instead, look for ways to capitalize on a talent or skill to bring in additional income.

“The job market is getting better right now. Don’t be afraid to look around to see if you can find a better job which pays more, or think about picking up a little extra money by participating in the gig economy,” says Haas.

Technology has significantly lowered the barrier to entry for many gig-type jobs. Making extra cash on a Saturday by driving for Uber, soliciting your talents on Fiverr, or helping someone get work done via TaskRabbit weren’t options for Gen-Xers. Today, almost anyone with an internet connection can make extra cash relatively easily. An added advantage for millennials is that you can use these tasks to develop job skills to increase your human capital and increase your earning potential.

5. Save Up While You Pay Down Debts

There are some things you shouldn’t do at the same time — like texting and driving — but you should definitely work on your savings and debts at the same time.

Saving while you have so much debt to pay off can feel like an impossible ask. But it’s important to prioritize savings just as much as paying down debt. Without cash reserves on the side, you’re more likely to take on more debt when unexpected expenses pop up over time (and trust us — they always do). An early savings goal should be to save at least three months of monthly expenses. Accomplish that while you make minimum payments on your other debts. Once you’ve reached that goal, you can save a little bit less and put a little bit more toward your debts.

Doing both also gets you into the habit of saving, so that once your debts are all paid down, you have already built a good habit. At that point you should start to think of how much you want to increase your savings rate instead of just getting your saving started says Vanaski.

“Saving 20% of your earnings would be a great target, but even if you can only save 5%, start there and increase it by a percentage every year,” Haas says.

6. Don’t Be Afraid to Invest

Wealth growth savings investing save

Once you’ve been able to save money for emergencies, you can begin to focus on saving for long-term goals. The best way to achieve long-term goals like retirement is to get into the market and invest. We get it — the stock market can be intimidating, especially for a generation that came of age during one of the worst financial crises in history.

According to a 2016 Bankrate study, only one-third of millennials own stock, while about 51% of Gen X-ers and 48% of baby boomers invest in the market.

Investing doesn’t have to be rocket science, and you don’t have to (and honestly, you probably shouldn’t) get into buying and selling individual stocks.

By simply setting aside 5%-10% of your paycheck in a 401(k) or IRA, you’re investing in the market. Many employer retirement plans have advisers on hand to help you pick your investments.

The important thing is to start as soon as possible, as early as possible. Time is a huge asset when it comes to investing since your earnings will have more time to grow and compound for decades.

If you’re stuck between paying down debt and investing, that’s understandable. If you have high-interest debt, like a credit card, with an APR over 8%, then you should absolutely focus on paying that debt down first and aggressively.

For more information on investing, check out these posts:

How to Set Up Your Investment Strategy for 2017

5 Things Millionaires Understand About Investing

It’s also important not to mistake making large purchases as increasing your net worth. Like we mentioned earlier, a home can be considered an asset but ONLY if the home becomes worth more than the loan you borrowed to pay for it. This is why the housing crisis of 2008 was so devastating to so many homeowners — suddenly, their homes were worth significantly less than they paid for them or could sell them for on the market. 

7. Invest in Your Human Capital

Increasing your income can help you increase your net worth just a bit faster. A possible way to do that is to invest in your human capital: the skills, knowledge, and experience that you have that adds value to your worth.

Constantly develop skills related to your field or a field in which you may be interested in entering. You can use a wealth of online resources to develop your skills in various areas, such as web development, podcast editing, or management, with sites like Lynda.com or with learning courses on Linkedin. You may even consider pursuing a higher degree if the long-term benefit will outweigh the cost of education.

 

Mandi Woodruff
Mandi Woodruff |

Mandi Woodruff is a writer at MagnifyMoney. You can email Mandi at mandi@magnifymoney.com

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3 Ways to Keep Medical Debt from Ruining Your Credit

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Turns out, your physical well-being isn’t the only thing at stake when you go to the hospital. So too is your financial well-being. That’s because no debt is more common than medical debt.

The numbers are staggering in their scope. According to the Consumer Financial Protection Bureau, more than half of all collection notices on consumer credit reports stem from outstanding medical debt, and roughly 43 million consumers – nearly 20% of all those in the nationwide credit reporting system – have at least one medical collection on their credit report.

Now, you might be inclined to think that because you’re young or have both a job and health insurance, medical debt poses you no risk. Think again. According to a recent report from the Kaiser Family Foundation, roughly one-third of non-elderly adults report difficulty paying medical bills. Moreover, roughly 70% of people with medical debt are insured, mostly through employer-sponsored plans.

Not concerned yet? Consider that a medical collection notice on your credit report, even for a small bill, can lower your credit score 100 points or more. You can’t pay your way out of the mess after the fact, either. Medical debt notifications stay on your credit report for seven years after you’ve paid off the bill.

The good news (yes, there is good news here) is you can often prevent medical debt from ruining your credit simply by being attentive and proactive.

Pay close attention to your bills

Certainly, a considerable portion of unpaid medical debt exists on account of bills so large and overwhelming that patients don’t have the financial wherewithal to cover them. But many unpaid medical debts catch patients completely by surprise, according to Deanna Hathaway, a consumer and small business bankruptcy lawyer in Richmond, Va.

“In my experience, it’s often a surprise to people,” says Hathaway. “Most people don’t routinely check their credit reports, assume everything is fine, and then a mark on their credit shows up when they go to buy a car or home.”

The confusion often traces back to one of two common occurrences, according to Ron Sykstus, a consumer bankruptcy attorney in Birmingham, Ala.

“People usually get caught off guard either because they thought their insurance was supposed to pick something up and it didn’t, or because they paid the bill, but it got miscoded and applied to the wrong account,” says Sykstus. “It’s a hassle, but track your payments and make sure they get where they are supposed to get. I can’t stress that enough.”

Stay in your network

One of the major ways insured patients wind up with unmanageable medical bills is through services rendered – often unbeknown to the patient – by out-of-network providers, according to Kevin Haney, president of A.S.K. Benefit Solutions.

“You check into an in-network hospital and think you’re covered, but while you’re there, you’re treated by an out-of-network specialist such as an anesthesiologist, and then your coverage isn’t nearly as good,” Haney says. “The medical industry does a poor job of explaining this, and it’s where many people get hurt.”

According to Haney, if you were unknowingly treated by an out-of-network provider, it’s not unreasonable to contact the provider and ask them to bill you at their in-network rate.

“You can push back on lack of disclosure and negotiate,” Haney says. “They’re accepting much lower amounts for the same service with their in-network patients. They may do the same for you.”

Work it out with your provider BEFORE your bills are sent to collections

Even if you’re insured and are diligent about staying in-network, medical bills can still become untenable. Whether on account of a high deductible or an even higher out-of-pocket maximum, patients both insured and uninsured encounter medical bills they simply can’t afford to pay.

If you find yourself in this situation, it’s critical to understand that health care providers themselves usually do not report unpaid bills to the credit bureaus – collection agencies do. After a certain period of time, most health care providers turn unpaid debt over to a collection agency, and it’s the agency that in turn reports the debt to the credit bureaus should it remain unpaid.

“If you can keep it out of the hands of the collectors, you can usually keep it off your credit report,” says Hathaway.

The key then is to be proactive about working out an arrangement with your health care provider before the debt is ever sent to a collection agency. And make no mistake – most providers are more than happy to work with you, according to Howard Dvorkin, CPA and chairman of Debt.com.

“Trust me, no one involved with medical debt wants it to go nuclear,” says Dvorkin. “The health care providers you owe know very well how crushing medical debt is. They want to work with you, but they also need to get paid.”

If you receive a bill you can’t afford to pay in its entirety, you should immediately call your provider and negotiate, says Haney.

“Most providers, if the bill is large, will recognize there’s a good chance you don’t have the money to pay it off all at once, and most of the time, they’ll work with you,” he says. “But you have to be proactive about it. Don’t just hope it will go away. Call them immediately, explain your situation, and ask for a payment plan.”

If the bill you’re struggling with is from a hospital, you may also have the option to apply for financial aid, according to Thomas Nitzsche, a financial educator with Clearpoint Credit Counseling Solutions, a personal finance counseling firm.

“Most hospitals are required to offer financial aid,” says Nitzsche. “They’ll look at your financials to determine your need, and even if you’re denied, just the act of applying usually extends the window within which you have to pay that bill.”

If all else fails, negotiate with the collection agency

In the event that your debt is passed along to a collection agency, all is not immediately lost, says Sykstus.

“You can usually negotiate with the collection agency the same as you would with the provider,” he says. “Tell them you’ll work out a payment plan and that in return you’re asking them to not report it.”

Most collection agencies, according to Haney, actually have little interest in reporting debt to the credit bureaus.

“Think about it,” Haney says. “The best leverage they have to get you to pay is to threaten to report the bill to the credit agencies. That means as soon as they report it, they’ve lost their leverage. So, they’re going to want to talk to you long before they ever report it to the bureau. Don’t duck their calls. Talk to them and offer to work something out. They’ll usually take what they can get.”

At the end of the day, according to Haney, most people can keep medical debt from ruining their credit by following one simple rule.

“Just be proactive,” he says.

Mandi Woodruff
Mandi Woodruff |

Mandi Woodruff is a writer at MagnifyMoney. You can email Mandi at mandi@magnifymoney.com

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