Home > Managing Debt > When You’re Most Likely to Get a Debt Collector Call

Comments 0 Comments

’Tis the season for consumers to get prepared for the two busiest and most expensive holidays of the year, Thanksgiving and Christmas. ’Tis is also the season when debt collectors begin the process of preparing their training plan and strategies for their busiest and most productive time of each year: tax season. For debt collectors, tax season spans from mid-February to the end of May each year, when the majority of income tax refunds are sent back to consumers by federal and state governments. And what do consumers do with their tax returns? Nearly 40% of consumers who were anticipating income tax refunds planned to pay down their debt with it, according to a National Retail Federation survey earlier this year.

This four-month time period presents a win-win scenario for both consumers and debt collectors. For consumers who receive an income tax refund and want to use it to pare down debt, tax season simply presents an opportunity for them to work with debt collectors and pay off their debt in full. For those consumers who might not be able to pay off their debt in full and want to try and settle their account for less than the balance owed, tax season also is an opportune time to negotiate settlements with debt collectors.

While debt collectors generally have the ability to offer settlements on accounts throughout the entire year, they are often provided with more flexibility during tax season when it comes to accepting less for a settlement. (However, not all debt collectors can accept settlements, and whether a debt collector can settle an account for less than the balance is pre-determined by their contract with their client.) But clients and debt collectors alike understand that almost half of those consumers who receive an income tax refund will use it to pay down debt, so it isn’t a matter of whether the consumer is going to pay their debt with their income tax refund, it becomes a matter of who they are going to pay. That is where the consumer has the upper hand and ultimately the consumer will pay the debt collector that is most willing to work with them and give them the best deal.

This is why tax season is debt collectors’ busiest and most productive time of year; they understand the unique challenge and opportunity tax season presents and they want to capitalize on it. From my experience, debt collectors on average will see an increase in production somewhere between 20%-40% compared to the other eight months of the year — in some cases even more. This increase is not just tied to pure dollars collected but across the board on all measurable metrics, the most important one being consumer contacts. This means consumers openly communicate with debt collectors an average of 20%-40% more during tax time, mainly because they have funds to pay their debts.

The challenge for debt collectors during tax season is trying to be one of the first debt collectors to establish contact with consumers and get the consumer committed to paying the debt once they receive their income tax refund. For consumers who have decided to use their tax refund to pay debt, their biggest challenge is trying to pay off or settle as much of their debt as possible.

It’s important to remember the credit consequences of unpaid collection accounts. Even just one unpaid bill that gets sent to collections can have a major impact on your credit score. (You can check your credit scores for free every month on Credit.com.)

Ultimately, however, tax season presents a mutually beneficial opportunity for both consumers and debt collectors to work toward a solution for paying the debt.

You can find the collection accounts in your name by checking your credit report, and you can get free copies of your credit report once a year under federal law.

More on Managing Debt:

Image: LDProd

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team