Just like the current situation with student loans, the rules, policies and trends on medical debt are often in flux. Stark changes to the system often happen when a new administration enters the White House, leaving consumers and businesses to navigate the fiscal impacts. 

In July of 2025, there was a major change that made it possible for medical debt to show up on credit reports once again. Join us as we go over the current state of medical debt and the impact it could have on your customers and collection strategy. 

Insights on the Changes to Medical Debt Rules

Back in April of 2023, TransUnion, Experian and Equifax made the decision to stop medical debts of less than $500 from showing up on their credit reports. This kicked off efforts by the prior administration, which the Consumer Financial Protection Bureau (CFBP) in January of 2025 finalized in a rule that prevented any medical debt from showing up on credit reports. This move also stopped lenders from using consumer medical data in their decision to determine creditworthiness and approve new lines of credit. 

It looked like medical debt was no longer going to be a roadblock for consumers participating in the financial system. However, that changed in July when a federal judge in Texas overturned the new medical debt rule set by the CFPB (in Cornerstone Credit Union League v. Consumer Financial Protection Bureau). The judge felt that the CFPB had overstepped their jurisdiction, and there currently aren’t many indications that this ruling will be overturned. 

So, where do the medical debt rules stand? Medical debts under $500 still won’t be included in credit reports, and bills over that amount take one year to appear. While this gives consumers some time, many experts expect medical debt to grow. This ruling has left many consumers across the country worrying about how their credit score will be impacted. 

Why Medical Debt in 2025 is Expected to Grow

Many healthcare and financial experts expect medical debt in the U.S. to grow even more as 2025 continues. One of the main reasons is that recent cuts to Medicaid will leave more consumers without a reliable source of medical insurance. Reports estimate that roughly 2.2 million families are more likely to have medical debt due to losing Medicaid coverage. 

Another key factor is that the Affordable Care Act premium tax credits are expiring. This will increase the costs of private insurance coverage, and potentially lead to more people becoming uninsured. These factors together raise the risk of more families enrolling in high deductible insurance plans with lower monthly premiums, which could lead to more consumer debt when an emergency strikes. In fact, a recent Federal Reserve report found that 37% of adults can’t afford a $400 medical emergency. That’s almost $1,000 less than the average insurance deductible. 

The potential rise in medical debt in 2025 will make it more difficult for many consumers to manage their finances. Other economic factors like groceries being more expensive, shifts in inflation and student loan repayments picking back up, only add to the pressure. As a result, many collection strategies will need to adapt, or they could see a drop in repayment performance. 

What These Medical Debt Trends Mean for Your Customers and Collection Strategy

The common thread with the current state of medical debt is that more Americans are poised to be dealing with heavier financial burdens. Since the average medical debt for American families is slightly over $1,000, there could be more opportunities for smaller amounts. With larger medical debts weighing heavy on credit scores, people will be more incentivized to take care of smaller debts to improve their credit. 

Even when people are motivated to take care of their debt, it’s often still a challenge for companies to reach them effectively. The current state of medical debt is likely going to add to these difficulties. The vast majority of medical collections communicate through phone calls and physical mail. That means other creditors and collectors are going to have a tougher time breaking through all the noise in those channels. 

Experts in collection services agree that medical debt has emphasized the importance of digital communications. With phone calls and physical mail becoming an even more crowded medium, combined with more consumers preferring not to be contacted that way, companies need to adapt. Outbound calling is only becoming more difficult, which is why a digital-first omnichannel approach is one of the best ways to improve collection performance. 

To help address these trends, many businesses are turning to self-serve portals once someone engages with a digital communication. Self-serve portals empower customers by giving them more control over the repayment process and provide a low-friction way to make a payment. 

Ready to Collect Faster from Happier People?

Medical debt is going to have an impact on consumer finances for the foreseeable future, and as a result, debt collection will need to adapt. As the likelihood of your business communicating with people in medical debt increases, your collections strategy should honor their unique preferences. 

Retain by TrueML Products can automate digital communications using machine learning for better repayment results. By creating a user-friendly digital experience, your business can keep operating costs low while honoring your customer’s communication preferences. If you want to optimize the engagement of your debt collection communications, schedule your consultation with our team today. 

Roughly 7.7 million people in the U.S. were enrolled in the previous administration’s SAVE plan, which is coming to an end. Many experts believe that this change will add to the financial burden facing millions of Americans. 

This change increases the likelihood of your customers balancing multiple debts, and could have real effects on debt repayment communication strategies. Join us as we break down this landmark change, and how your business can build trust with borrowers. 

Important Changes on Student Debt That Impact Debt Recovery Services

The One Big Beautiful Bill Act is changing a lot for current and new student loan borrowers. It will likely take time to cause big impacts, but it’s important for businesses to start thinking about how to change their approach to debt repayments now. There are several key factors your business needs to know: 

• Interest for student loans on the SAVE plan will resume on August 1, 2025. This means that monthly payments for student loan debt are going to increase, and could push more student loan or other accounts into delinquency in the short term as borrowers try to manage budgets. 

• The new Bill is creating the Repayment Assistance Plan (RAP), which is an income-based plan calculated for each borrower. Compared to the old plans, RAP does waive interest and requires a longer period of time (30 years) of qualifying payments before being eligible for cancellation. 

• Under RAP, borrowers will not be able to defer loan payments in the event of economic hardship like unemployment starting on July 1, 2026. Some experts fear this could cause a domino effect for people with multiple debts, with delinquent student loans sparking delinquency for other accounts. 

How to Talk to Customers with Student Loan Debt

With student loans being one of the most common types of debt in the country, it’s likely that some of your customers hold this kind of financial obligation and may be struggling with repayment. In fact, according to an analysis done by TransUnion in April, 5.8 million people were at least 90 days behind on their student loan payments. And the new rules could raise this number even higher. It’s one of the main reasons why debt collection strategies could get more aggressive as more student loan changes take effect. 

For companies collecting on student loan debt, phone calls and physical mail are still the primary communication channels. As the new rules take effect, borrowers will likely receive an avalanche of notifications on the new procedures to follow and reminders to make payments. That means more competition for your customer’s attention through these channels. 

With your customers potentially being contacted by multiple businesses and/or creditors, communications that capture their attention and honor their preferences are more likely to earn engagement. 

Consider Using a Digital Communication Strategy for Debt Repayments

If your business is trying to improve the performance repayment communications, consider using an omnichannel approach that incorporates consumer-preferred digital channels. And to implement digital communications at scale, there are software-as-as-service (SaaS) tools that automate outreach. 

Digital communications are where most consumers prefer to be contacted about financial matters. Email continues to be the most preferred platform with people in younger generations like Gen Z and Millennial (also more likely to have student loans), prefer to get text messages for financial matters. Your business can also avoid the challenges of setting up your own digital communication delivery system by using tools like Retain by TrueML Products. 

Retain is a white-label SaaS tool that lets your business automate digital communications to customers. It’s powered by a patented machine learning algorithm that leverages data from millions of customer interactions to determine the best time, message and channel for each unique customer. 

Empathy Will Be in High Demand from Consumers

Student loan borrowers are going through a whiplash. Many of them were counting on loan forgiveness or certain payment plans, and now the rules are changing. Dealing with sensitive financial issues can be stressful, and the risk of added financial burden is adding fuel to the fire of consumers wanting more empathy from businesses they interact with. A recent Salesforce consumer study revealed that 68% of consumers expect brands to show empathy. 

When someone needs to make payments to multiple businesses, the ones that extend empathy are going to stand out. The root of empathy in this case is showing your customers that you understand their challenges. Roughly 66% of consumers expect companies to know their unique needs. This creates an opportunity for your business, since it’s common for debt repayment communications to take a one-size-fits-all approach. 

A great way to extend empathy to your customers is through the tone of content that’s used in your digital communications. Simple additions like adding more understanding language or even an animated gif to encourage a smile goes a long way. Another good strategy is to offer customers more options and flexibility for repayments. This shows that you’re taking their financial needs into account. 

Empathy is the path to building trust with student loan borrowers, and more trust increases the chance of them making debt payments. 

Talking to Customers with Student Loan Debt is Easier with Retain

Odds are, some of your customers are dealing with changes to student loans. And as the landscape surrounding student loan debt changes, Retain’s AI can learn from customer interactions to optimize for better engagement. 

If your business wants to stay ahead of all the variables that affect debt repayment, Retain’s automated digital communication platform is the answer. Contact our team to schedule a consultation today. 

This means that sending your Model Validation Notices (MVNs) for debt collection is about to become even more expensive. What are the long term implications of this price increase? And is there a way for your business to lower the cost to collect debt? Join the Retain team as we discuss the answers to both those key questions.

What Are the Main Drivers for the Forever Stamp Price Increase?

The USPS is in the midst of their “Delivering for America” plan. The goal is for USPS to be financially self-sufficient. To reach that goal, they’re regularly increasing prices on high performing products, and the Forever Stamp is at the top of that list. It’s important to know that this strategy is working. In fact, the USPS is expected to increase the price of stamps at least twice a year through 2027. 

This direct impact to the bottom line isn’t the only USPS-related challenge your service operations are facing. In October of 2024, the USPS scaled back its delivery targets of first class mail. Originally, the goal was to deliver 93 percent of first class two-day mail and 90 percent of three-to-five-day mail on time. That’s been walked back to 87 percent and 80 percent respectively. 

When you have to send an MVN for each account and are likely getting more placements each month, there’s a significant cost-increase about to hit your bottom line on July 13th. Plus, there’s the added cost of a larger percentage of those notices being delivered later than planned.

How Do You Maintain Your Cost-to-Collect Ratio with Each MVN Potentially Becoming More Expensive?

The recent Forever Stamp price increase and USPS delivery targets are a challenge for your MVN strategy. In the face of debt collection costs going up and impacting profits, many businesses look to the following tactics: 

• Absorb the Cost in the Short Term: In the wake of the stamp cost increase, some businesses look to simply take the hit until their forecasts can be adjusted. The potential issue with this tactic is that it’s difficult to accurately forecast when future stamp prices are uncertain. It’s difficult for many businesses like law firms or debt buyers to add more flexibility in their direct mail budget. 

• Try to Pass On Costs or Charge Off More Debt: Another potential tactic is increasing the price of your own services to off-set the Forever Stamp increase. The issue here is that finding the right increase that aligns with your customer’s needs takes time. And charging off more debt could upset the balance of your business’s financial health. 

• Reduce Mailing Volume: Some businesses might opt to reduce mailing efforts and only focus on sending MVNs to collect from accounts that are most likely to engage with their company. However, it can be difficult to identify the higher value and more likely to pay accounts, and you still have to decide what to do with the rest. 

The good news is that there’s another option for businesses looking to navigate these market challenges. Digital debt collection and electronically sending your MVNs via email is a great way to protect the profitability of your business.

Why Your Business Should Consider Digital Debt Collection Strategies

One way to limit the impact of Forever Stamps price increases is to send some or all of your MVNs electronically. Why should your business consider digital debt collection strategies? For starters, today’s consumers prefer to conduct their financial business digitally. With the right Electronic Validation Notice (EVN) strategy, you’ll know who opened, clicked and showed interest to resolve their debt. This data not only provides an audit trail necessary for compliance but also gives your business insight into the types of messages that resonate with your customers.

Regardless of how savvy your business is with digital communications, the right partner can help your emails reach 87% of inboxes. By using email for a percentage or all of your account placements, you’ll protect the profitability of your business, unlock more first time payers and uncover which customers prefer digital communications.

Why haven’t more businesses used this method to lower the cost to collect debt? Many businesses haven’t made the switch to using email and digital strategies for two reasons. First, setting up your own email distribution system at scale for EVNs is often costly and time consuming. Additionally, it’s common for businesses to realize they lack the expertise to ensure the digital communications are being sent compliantly. However, there are partners who can make the process easy.
Retain by TrueML Products Helps You Recover More While Spending Less

Retain by TrueML Products is a white label SaaS that allows you to deliver compliant EVNs to past due customers. It’s a ready-to-use solution for law firms and businesses looking to streamline their servicing operations while protecting profit margins from outside factors. By going digital with a partner who understands compliance, you can replace stamps with email sends that lead to faster and cost-effective account resolutions. Request a consultation to learn more about how Retain can get your content seen and engaged with by customers.

• Overall delinquent credit card balances increased by 2.25% from October to November 2024, even before the holiday shopping season*
• 48% of credit cardholders report having a credit card balance, up from 39% who reported carrying a balance in a December 2021
• 1 in 5 consumers with revolving credit card debt say they generally only make the minimum payment on their credit cards each month
• 80% of surveyed credit cardholders said their outstanding credit balance is either holding constant or increasing
• Household debt balances increased by $147 billion in the third quarter of 2024, a 0.8% rise from Q2 2024

And that debt is concentrated in one place: the average debt a consumer owes is $104,215 across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debts like personal loans. Combined with higher interest rates driving higher minimum payments, consumers are obviously feeling over-stretched and stressed. 

Balancing so many past-due balances is an obvious challenge for consumers. In fact, 23% of consumers who’ve paid late in the past six months say it is because they forgot their bill entirely. But if your customer outreach plan solely revolves around call-and-collect, be prepared to see your operational costs increase.  

So how can businesses and lenders ensure they are staying top-of-mind for their customers’ repayment goals without breaking the bank with expanding call centers and hiring more collection agents?

Let’s start by looking at how customers prefer to be contacted, how to make your outbound calling agents most effective, and why a multi-channel approach is a win-win for both your customers and collectors.

What Do Customers Want? And What Do Calling Agents Want?

For businesses executing outbound call strategies and leveraging dialer technologies, it is important to keep in mind studies show 49.5% of consumers take no action after a collection call—and that’s if you can actually get a customer to answer the phone. This along with diminished returns of connection rates shows outbound dialing has become more expensive and less impactful.

It’s no secret that consumer preferences are changing rapidly, and younger generations especially do not want to answer phone calls—and it’s important to keep in mind these younger borrowers will be the customers businesses will be servicing for the next 30 to 40 years, especially in a delinquent environment.

In general, consumers want to pay off their debts, but they want to be able to do so when it’s most convenient for them, which is often outside the “presumptively convenient times” between 8am and 9pm—but what does that mean for the humans dialing phones for traditional call-and-collect methods?

When businesses deploy an outbound call strategy before digital, often agents are shooting in the dark despite good intentions and dedicated efforts—which can affect outbound agent morale, making it a difficult environment to hire and retain top talent. And given today’s economic landscape, it’s challenging to call and collect from people who are behind on their bills or payments when so many other financial obligations are competing for dollars.

The key: let agents do what agents are good at—the human touch—but leverage digital as the first touchpoint. Let digital get the customer to understand where they are in delinquency. If and when they want to talk to a human, agents are there to do what agents do best: empathize and resolve any issues that digital cannot.

Agents are able to attend to higher-value inbound calls when digital, self-serve options are available for those who just want to make a payment—and it allows those customers to do so in a more convenient, preferred way. 

Digital-First, Save More

Digital early stage solutions reduce collections costs for leading organizations across industries by making full-time employees (FTEs) more impactful (or even lowering FTE headcount) and reducing overall expenses while maximizing repayment rates. 

Companies that do rely heavily on an outbound call strategy must realize how expensive each call becomes. The longer that an account is in delinquency, every call becomes more expensive because the likelihood or the propensity to pay diminishes as the debts get older in age. So being able to automate and find those right channels at the right time with a digital strategy will help those phone calls get better results.

• 4x increased agent efficiency 
• 75% reduction in required FTE for customer outreach

Plus, the digital-first strategy is infinitely scalable—it doesn’t matter how rapidly a business grows on the frontend for lending or on the backend with new accounts that fall into delinquency. This digital-first approach allows companies to mitigate against turnover or having to compete for talent in the market. And again, FTEs can now be more effective in the delinquency cycles where phone calls are preferable, especially as accounts get further into delinquency.

Making outbound phone calls absolutely serves a vital part of a business’s multi-channel strategy, but deploying digital first will make those calls more cost-effective. It also delivers a stronger connection rate by identifying those preferences through feedback from leveraging a digital-first communication strategy.

Think about how this data can help businesses not only from a performance and liquidation perspective but by learning from which customers are opening communications versus which ones aren’t. Those that don’t respond to digital should go to the top of the call queue because the data points towards a probable preference for person-to-person calling.

The Retain Difference

Learning from these digital engagements is vital for optimization, but if an organization is new to digital communications or has only been sending mass-blast, one-size-fits-all emails, it can feel like an uphill trek to start getting insights to drive better results. 

 With Retain by TrueML Products, businesses get a SaaS solution that automates your digital communications and keeps operational costs low. Retain’s digital platform can efficiently and compliantly scale to any portfolio volume while maintaining best-in-class customer engagement.

And no need for expensive headcount to manage unresponsive customer relationships and delinquent accounts—Retain’s pricing plans are based on the number of accounts you’re managing, never on how much you’re collecting, so as your programs improve, your costs don’t fluctuate. Retain gives businesses the tools to improve engagement and increase profit.

Maximize the productivity of your business’s resources with a managed, digital-first approach that enhances the efforts of your FTEs and overall collections operations. Start with a consultation today!

*According to Experian’s Ascend Market Insights, Release 104

Sources:

• Bankrate
• NerdWallet
• PYMNTS
• New York Fed
• Business Insider

But staying top of mind for consumers is harder than ever using traditional call-and-collect methods considering stricter compliance regulations and the fact that 94% of unidentified calls go unanswered. Plus, surveys have found that 59.5% of consumers prefer email as their first choice for communication in debt collection. When a business contacts a customer through their preferred channel first, it can lead to a more than 10% increase in payments.

But just adding email into your customer communication mix isn’t enough—if your messages never reach their inbox, it doesn’t matter what that customer’s preferred method of communication may be.

It’s time to take a closer look at email deliverability and the role it plays in the best practices for debt collection email communications.

Email Delivery Rate vs Email Deliverability Rate (and Why You Should be Measuring Both)

The word “deliverability” may sound similar to “delivery,” but when it comes to customer engagement via email, it’s important to understand the difference and measure each rate accordingly.

What is Email Delivery Rate?

Email Delivery Rate refers to the successful transmission of an email from the sender to the recipient’s mail server. It is the measurement of emails delivered divided by the number of emails sent. Bounces (when an email gets rejected by the mail server for any reason) and failures will cause this rate to go down. 

Measuring delivery rates helps answer the question “did the email you sent actually make it to the recipient?” But it’s not the end all be all. If your email gets caught in the recipient’s spam filter or junk folder, how much will a good delivery rate help your business goals? That’s why it is important to also measure deliverability.

What is Email Deliverability?

Successful email delivery, when your email was accepted by the recipient’s mail server, doesn’t mean that it actually makes it into their inbox. Email deliverability, or inboxing rate, divides how many emails reach the recipient’s inbox, as opposed to their spam folder, by the total number of emails sent. Your deliverability is influenced by a variety of fluctuating factors, one of the most common being  Internet Service Providers (ISPs). 

By accurately measuring email deliverability rates, you’ll help answer the question: “Did the email you sent actually make it to the inbox—or did it get caught in spam?”

Why Debt Collection Emails Go to Spam

Email deliverability and delivery rates play a key role in identifying why emails end up in certain folders. A common issue for debt collection emails is the communication ends up in spam, the customer never sees it and fails to pay as a result. Some of the most common reasons why a debt collection email goes to spam include: 

• Spam Filter Triggers: Every email provider has spam filters built into the platform. Spam trigger words like “click here”, “act now”, “urgent” and more should be avoided to help achieve higher email deliverability. 
• Not Updating Your Mailing Lists: Every time a business sends an email that bounces back, their sender reputation takes a small hit. If this happens in mass and consistently, future emails are more likely to end up in spam. 
• Sending Generic Emails: Email providers are more likely to send a message to spam if it’s generic and part of a mass send. It’s a best practice to add a level of personalization to the debt collection email being sent to help you avoid this issue.

Best Practices for Digital Debt Collection Emails

Understanding these different metrics can help influence your email strategy to delinquent accounts, but there’s more to a successful email program than just measuring data  analytics and hitting “send.” Several best practices for digital debt collection emails for you to follow include:

• Building and maintaining a positive sender reputation with ISPs and ESPs
• Ensuring good email list hygiene
• Sending to actively engaged subscribers 
• Maintaining consistent volume and cadence (avoid spikes)
• Avoiding spammy subject lines 
• Developing valuable content that would engage subscribers 

While many of these best practices may seem like no-brainers, achieving them can take more skill and effort than most businesses expect. Each of these contribute to email delivery rates and more importantly, deliverability to recipients’ inboxes—key drivers towards consumer engagement and your bottom line. With better email deliverability, your business can increase recovery rates and maintain compliance.

The Retain Difference Boosts Your Email Deliverability

So how does Retain perform above and beyond the competition for email deliverability, delivery and engagement? 

Retain’s dedicated Email Operations and Deliverability Team proactively monitor and make adjustments, along with using our patented machine learning engine to dynamically make updates in real-time. Our team of email deliverability experts proactively stay on top of Email Service Provider (ESP) best practices and maintain relationships with ISPs for optimal email acceptance rates. 

Additionally, Retain allows your business to use a suite of digital communication channels including email and SMS to meet your customers where they are. It is designed to scale seamlessly and cost-effectively to meet the needs of your organization at any given time. 

Ready to learn more and start improving your digital debt collection efforts through better digital engagement strategies?

Download our in-depth eBook “Email Deliverability: Don’t Miss the Mark Delivering Your Customer Communications” here»»

Sources:

• The Wall Street Journal
• FICO
• McKinsey

Whether you’re a service provider, lender, or any business with important communication goals, your 2025 operations budget can go farther by optimizing your delinquent customer communication strategy with Retain. Automating digital communications to reach your customers when and where they are most likely to engage can reduce operating costs while increasing your repayment rates and profits.

1. Re-focus FTEs on business growth, initiatives, and goals

Consider the opportunity cost when full-time employees (FTEs) are chasing delinquent accounts vs pursuing prospects or attending to customer relationships. This is especially true for start-ups and growing businesses that will inevitably need to scale outreach to delinquent consumers; and efficiently scaling customer communications requires investment in digital transformation. While studies show that 49.5% of consumers take no action after a collection call, digital-first can lower the cost of collections by upwards of 15% and increase resolution rates up to 25%.

By partnering with Retain, our clients have been able reallocate resources with up to:

• 4x increased agent efficiency 
• 75% reduction in required FTE for customer outreach

With Retain, there’s no need for expensive headcount to manage your unresponsive customer relationships and delinquent accounts. Our pricing plans are based on the number of customers you’re managing, never on how much you’re collecting–so as your programs improve, your costs don’t fluctuate.

2. More intelligent engagement strategy – go beyond segmentation

It should come as no surprise that contacting consumers in their preferred communication channel gives businesses better chances for engagement, and in turn repayment:

• Contacting first through a customer’s preferred channel can lead to a more than 10% increase in payments
• Digital-first customers contacted digitally make 12% more payments than those contacted via traditional channels 

But it takes more than just adding digital channels to the communication mix. You can leverage data science and analytics in automated communications to send custom messages at the right time through the right channel—a more sophisticated strategy going beyond basic segmentation.  

Retain is powered by patented technology that’s informed by engagement data from millions of customers. Retain’s machine learning engine assesses a multitude of customer interaction variables, from your message content all the way through engagement data, and provides dynamic performance improvements to your operations—no fine-tuning necessary.

3. Building in-house vs strategic SaaS solutions

Whether you are looking to evaluate your current strategy or jumpstart new communication channels to better engage all your customers, it’s important to consider the pros and cons for your budget between building in-house engagement programs versus working with a partner.

If you build it you:

• Need expertise in digital optimization, data science, deliverability, and digital experience to develop programs that engage with customers in preferred ways
• Implement and automate email and/or SMS messaging
• Dedicate a team to stay on top of monitoring, adjusting, and maintaining relationships with ISPs and SMS carriers
• Make sure federal and state regulations are being followed in strategy and implementation 

If you partner with Retain you can expect:

• Ready-to use, patented machine learning engine informed by nearly 6 million customer engagements
• Ability to scale operations without adding headcount
• Dedicated Email Operations and Deliverability Team proactively monitors and makes adjustments, assisted by our patented optimization engine
• Email and SMS compliance functionality at scale including opt-out reporting for your consent management

4. Better digital communication delivery rates drive self-service and save on costs

Prompting customers to engage digitally or through self-serve options saves FTE resources, reduces paper and postage costs, and enables scalability without additional headcount—and better email delivery and deliverability rates increase that engagement (because what good does it do if your message never reaches their inbox?). 

But as with everything in business, fluctuations will happen with your email delivery and deliverability rates—is your operations team equipped to respond and adjust to these changes?

Retain’s dedicated Email Operations and Deliverability Team proactively monitors and makes performance adjustments, stays on top of ESP best practices and maintains relationships with ISPs for optimal email acceptance rates. With Retain you can catch your business up to speed and exceed the national industry averages in email metrics:

• Retain Delivery Rate: 98.6%
• Average Industry Rate: 90%

• Retain Deliverability Rate: 87%
• Average Industry Rate: 84.8%

Get Started Optimizing Your Operations Budget with Retain

From managing past-due account communications to reminding customers of upcoming activity, Retain enables your business’s digital transformation without breaking the bank for your operations budget. Retain is your ready-to-use solution for engaging and retaining customers throughout their journey—from reminders to repayment.

Start engaging customers more efficiently and effectively by scheduling a consultation today»»

Sources:

• McKinsey
• Fico

Initial Demand Letters (IDL) or validation notices serve as one of the first steps towards reclaiming owed funds compliantly—but just as the name suggests, IDLs have traditionally been mailed out to recipients through physical letters. Since 71% of today’s consumers prefer to conduct financial business digitally, not only are paper letters a costly line item, but sending snail mail doesn’t garner good engagement or repayment outcomes. 

Traditional Communication Methods Can’t Compete with Consumers’ Digital Preferences

When you take into consideration that contacting first through a customer’s preferred channel can lead to a more than 10% increase in payments and 59.5% of consumers prefer email as their first choice for communication, it is clear that direct mail isn’t just expensive thanks to the price of paper and stamps, but it can also negatively impact repayment rates from late-payers who prefer digital contact.

Fortunately, there is a way to deliver required validation notices to consumers via email and still be fully compliant. But while switching from physical letters to digital notifications can significantly reduce paper and postage costs along with providing a compliant digital “paper trail” for law firms and businesses required to send Initial Demand Letters (IDL) to recover delinquent funds, it’s not as easy as copying the sample model validation notice into an email. 

With so many compliance nuances and the technical infrastructure required to make the switch from paper letters to electronic mail, attempting to send IDLs via email can be more of an undertaking for in-house teams to execute efficiently and effectively. 

Enter Retain by TrueML Products. Whether looking at pre-suit, post-suit/pre-judgment, or post-judgment, Retain helps law firms lower their servicing costs, increase profits, and stay in compliance. 

Retain’s Software-as-a-Service Solutions for Law Firms

Retain is a scalable, client-branded digital delivery tool that law firms can use to manage sending required notifications and optimize customer engagement. Retain’s Electronic Validation Notices (EVNs) get into 87% of the actual inboxes sent to—and provides feedback about which accounts may respond better to collection efforts via phone or snail mail.   

Retain empowers businesses and enhances customer engagement by:

• Cost Reduction: Businesses can mitigate the financial burden associated with physical mailings by leveraging Retain’s digital platform.
• Automation: Retain automates the delivery process of communications, expediting consumer engagement and alleviating the need for manual interjections.
• Scalability: Accommodating organizations of all sizes, Retain’s scalable architecture offers a versatile solution tailored to individual needs in real time.
• Deliverability: With a deliverability rate of 87%, Retain can help ensure your EVNs and other messages make it to your recipients and give you the best chance at productive engagement in debt recovery.
• Documentation: Sending notifications and communications via email provides a digital “paper trail” that can easily be organized for any audit purposes and documentation for compliance needs. 

And beyond EVNs, Retain’s robust solution can be applied to many use cases for law firms. 

Specific Law Firm Use Cases for Retain 

While all use cases aim to help law firms achieve repayment, Retain offers features and functionality for law firms to achieve effective engagement no matter where the consumer may be in the process—from pre-suit to post-judgment and all the stepping stones in between.

Let’s look at how law firms can engage consumers in each of the potential phases an account may pass through based on the timelines and activities on that account.

Pre-Suit

Avoiding litigation by way of settlements is one of the biggest opportunities for improvement for most firms—and digital engagement is key to leveraging this opportunity. Most firms send their demand letter out and then wait for their first settlements after the files receive their suit, which is why most firms only settle roughly 1% of their Pre-Suit files. Whereas Retain’s law firm clients are getting settlement plans on at least 7% of their Pre-Suit accounts that use Retain. More numbers from one of Retain’s clients using the solution for Pre-Suit communications:  

• 70%+ email opens each month
• 4%+ email clicks each month

Post-Suit, Pre-Judgment

The consumers that have reached this phase have the highest propensity to pay, representing a great opportunity for law firms to not only collect but save on costs as well. Consumers in this category are highly motivated to resolve before judgment comes down. Collecting during prejudgment can help save time and litigation and can lead to faster payment and lower court costs. Engaging with consumers early in this phase can also ​​ensure law firms are paid before the debtor runs out of assets.

Post-Judgment

Once consumers have rolled into this phase, attempts to recover debts often diminish for law firms due to the strain it puts on full-time employees (FTE) and the costs accrued with sending physical letters and outbound dialing. But with digital communications sent via Retain, these accounts can still be worked with minimal effort, and the more law firms engage, the more law firms recoup. In fact, one of Retain’s law firm clients was able to collect $96K (after client fees & costs) from accounts in their post-judgment inventory without a letter sent or a call made.

And Don’t Forget Payment Reminders for Settlement Plans

Regardless of what phase a consumer may fall in, if they have agreed to a settlement plan, one of the simplest ways to keep repayment on track is with payment reminders. Even if law firms have integrated email into their communication outreach, it can often be a manual process or a mass blast campaign that ignores the nuances of a true engagement strategy. Retain provides not only a platform to send digital reminders—both email and SMS—but it also helps guide the ideal channel and timing to send those messages for each individual consumer. 

Bottom-Line Benefits for Law Firms

No matter what use case would be most helpful to your business, these bottom-line benefits will make an impact:

• Improve Your Profits & Market Share: Engage and connect with more accounts than would be possible with manual efforts from FTEs and increase market share
• Maximize Your FTEs’ Efforts: Engaging more accounts digitally allows your FTE to focus their efforts where needed most
• Optimize With Electronic Validation Notices: Switching from physical Initial Demand Letters and other consumer communications to digital notifications (such as EVNs) will significantly reduce paper and postage costs 

Retain makes these benefits accessible to any business or law firm, regardless of their familiarity with digital communications, and offers EVNs as both a feature integrated within our larger service offerings or as a stand-alone solution.

It’s time to stop buying stamps and start hitting “send” when it comes to delivering validation notices to past-due customers. Learn how to improve your communication with consumers in a digital channel that results in faster account resolution by scheduling a consultation here»»

Sources: 

• Bankrate
• McKinsey
• FICO

What is driving the consistent cost-increase?

The use of first class mail, the USPS’s main revenue driver, has been in a nosedive since 2007. In July 2007, the agency’s volume of single-piece first class (bill payments, letters, cards) was at 2.7 billion items. As of June 2023, that number has fallen to 900 million, a 68% reduction in volume. With more consumers opting in to paperless bills and communications, this number will only decrease in years to come, which drains the agencies number one source of revenue. The rate increase also takes into account their obligation to pay retirees pension and benefits, which is more responsible for the recent increases than inflation itself. 

These continued rate increases are part of a 10-year initiative to reach profitability that was enacted in 2021. USPS reported a $6.5 billion loss in fiscal year 2023 and is projecting a $6.3 billion loss for fiscal year 2024.

What does this mean for your servicing operations?

With no clear end in sight to the rate increases for a forever stamp—and the requirement by the CFPB to send a model validation notice to a consumer as your first communication with them about their debt—your cost-to-collect will continue to rise. Especially considering the charge-off rate increase and more consumer accounts being charged-off and placed with agencies for collections. 

More importantly, it’s cost-ineffective given where consumer communication preferences are today. You’re sending a required and important message—via the most expensive communication vessel possible—that most consumers will never open to respond to. Collecting from consumers that are in default is already a difficult task, and each time you send another MVN you’re immediately eating into your profitability potential in an already razor thin margin potential based on contingency fee payment structures with clients. 

How do you plan to reduce or maintain your cost-to-collect when you have to send the MVN on every account you service?

One way to avoid this likely continuous cost bump is to send your MVNs electronically. Moving your model validation notices to digital channels is not only more cost-effective than sending snail mail but will also net you higher engagement, which could lead to a resolution with the consumer before having to make additional contact attempts.

But if you go digital, you need to make sure the MVN is reaching the account inbox and not landing in junk/spam, which is harder than you think. 

We already know that you’ll never know if someone opens the physical letter you sent them, but if you use the right digital communication strategy and partner, you’ll not only know who it was successfully delivered to (received it in their inbox), but who opened and even who clicked, showing intent to resolve, or at least that they’re aware of their debt. 

The value of knowing who is opening and who is clicking can signal to you as an operator that this is their preferred communication method/channel and how the majority of your attempts to collect on a debt should be communicated to them individually. Additionally, tracking these metrics can also give you insight to which are the right messages and what the right time to send may be to help you reach the desired outcome of resolution. 

Although you could build a strategy and process yourself that is compliant and highly-effective at reaching the inbox and then manage all of the components, finding the right partner and platform can deliver strong engagement performance and also save you time and resources you’d have to spend upfront and managing thereafter to create it on your own. Sending your first communication via email over snail mail is not only more cost-effective, it will ultimately help you optimize your servicing strategy from the MVN. 

Retain by TrueML Products makes these benefits accessible to any business or law firm, regardless of their familiarity with digital communications. Retain’s Electronic Validation Notices (EVNs) get into 87% of the actual inboxes for accounts you send to—and you’ll find out who doesn’t prefer to receive digital communications and who to focus your collection efforts on via phone and maybe even snail mail. 

Whether you’re a law firm, debt buyer, or any business with delinquent accounts, Retain is your ready-to-use solution for reaching and retaining customers while boosting repayment. In many cases, simply sending the validation notice electronically will more effectively encourage customers to pay the balance owed or at least set up a payment plan with you—studies have found that digital-first customers contacted digitally make 12% more payments than those contacted via traditional channels.

Optimizing your operations and strategy is critical, especially with charge-off trends increasing and not showing any signs of slowing down in the next 12 months. With credit card balances growing higher and more new accounts entering delinquency each month, it’s important to run a lean, mean, operating machine that scales as your servicing volumes will through 2025. 

It’s time to stop buying stamps and start hitting “send” when it comes to delivering validation notices to past-due customers. Learn how to improve your communication with consumers in a digital channel that results in faster account resolution by scheduling a consultation.

Sources:

• NPR 
• CBSNews
• McKinsey