If you’re agitated by letters and phone calls coming from Action Financial Services, try to keep a cool head. There are actions you can take today, backed by federal law, that’ll put you on stronger footing. There’s a chance you may even be able to eliminate the debt completely without paying.
But you need to get started now. Here’s what to do.
Table of Contents
What is Action Financial Services?
Established in 2009, Action Financial Services, LLC is a debt collection agency that collects debt from federal student loans on behalf of the United States Department of Education. 1
Action Financial Services is distinct from the similarly named debt collection agency National Action Financial Services, now known as NA Liquidating Company, Inc. 2
What is AFS?
“AFS” is another label that may be used for debt items related to Action Financial Services on your credit report.
Who does Action Financial Services collect for?
Action Financial Services exclusively collects federal student loan debt. They have been contracted to collect for the US Department of Education since 2014. 3
Is Action Financial Services a scam?
No, Action Financial Services isn’t a scam. They are a legitimate debt collection company.
However, scammers may still pose as representatives of Action Financial Services. If you want to check that you owe the debts they claim, verify your account information by contacting Action Financial Services directly.
Action Financial Services may still behave unethically
Even though Action Financial Services isn’t a scam, it’s possible they’ll still do something that violates your rights under the Fair Debt Collection Practices Act (FDCPA). Your rights (and how you can enforce them) are outlined further down in this article.
VIDEO: Action Financial Services in 2 Minutes—Fix Your Credit Report & Know Your Rights
Why is Action Financial Services calling me?
Action Financial Services will call, email, or mail you if you have unsettled debt (or they think you do). Because they deal with federal student loan collections, this might mean you’ve defaulted on your student loan payments.
All student loans can affect your credit score and be sent to collections if you fail to pay. However, federal student loan debt has several differences from other types of debt (including private student loans) that you need to be aware of.
How federal student loan debt is different
Here are the main things you should know about federal student loan debt: 4
- Debt collectors can make you pay without taking you to court: Unlike private student loan companies, the federal government can withhold your federal payments (such as your tax return or Social Security benefits) and garnish up to 15% of your disposable income without needing to first take you to court. This is known as “Treasury offset.”
- You’re responsible for paying collection costs: When your debt is sent to a collection agency like Action Financial Services, you’re charged a fee equal to 17.92% of your student loan balance. This fee covers the commission given to the collection agency, and any payments you make will go towards paying this fee first before you can continue paying off your loan.
- Federal student loan debt never goes away: Unlike most other types of debt, federal student loan debt has no statute of limitations and won’t ever become time-barred debt, meaning that as long as your debts remain unpaid, you’ll never be exempt from lawsuits or wage garnishment by debt collectors. 5
Although these differences may make it seem like you’re in a worse position than you would be if you had another type of collection account, you do have several options for getting federal student loan collection items off of your credit report that you wouldn’t have otherwise. These options are described further down in this article.
What to do when Action Financial Services contacts you about your debt
It’s best that you don’t ignore your debt collectors, as tempting as it may be. When Action Financial Services calls you, ask them to send a written notice detailing the debt they’re collecting, known as a debt validation letter, if they haven’t already.
In accordance with the FDCPA, all debt collectors are required to send this letter within 5 days of first contacting you. 7 It must contain the following information:
- The amount you owe
- Your name
- A statement informing you of your right to dispute the debt within 30 days of receiving their letter
- A statement informing you that if you dispute the debt in writing, they must mail you evidence of the debt within the 30 days
- A statement informing you that within 30 days after you’ve received the letter, you can send them a written request to provide the name and address of the original creditor
Action Financial Services representatives will keep trying to contact you unless you either pay your collections or reach an agreement with them or your loan provider (if you have federal student loans, you should be able to see who’s servicing them when you log in on the Federal Student Aid website).
There are several restrictions on how Action Financial Services can go about contacting you.
Restrictions on Action Financial Services
The FDCPA protects you from debt collector harassment and abuse by making it illegal for debt collectors to do any of the following: 7
- Call you multiple times per day
- Call you at night (before 8 am or after 9 pm, your time)
- Call you at work if you tell them you can’t receive calls at work
- Make automated calls or send pre-recorded messages telling you to make payments
- Contact any third party, including your family, friends, or coworkers, to discuss your debt
- Intimidate you or threaten to harm you, sue you, arrest you, or damage your credit
- Lie about your debt and try to collect more than you owe
- Accuse you of breaking the law or claim that not paying might result in jail time (you can’t go to jail over unpaid debt, unless you owe money to the IRS because you intentionally committed tax fraud)
It’s a good idea to familiarize yourself with your rights by reading the FDCPA and Telephone Consumer Protection Act.
Can I sue Action Financial Services for harassment?
Yes, you can sue Action Financial Services for harassment. If you can show that the debt collection company has violated your rights under the FDCPA, then you can collect $1,000 in statutory damages for each violation as well as payment for any damages that you’ve sustained as a result of their violation. 7 Action Financial Services will also be required to pay your attorney fees and court costs.
How to file a complaint against Action Financial Services
If Action Financial Services has violated your rights under the FDCPA or done something illegal, then you can report them to the Federal Trade Commission, the Consumer Financial Protection Bureau, or your state attorney general. From there, you’ll be able to find out whether you can also sue Action Financial Services.
Another option is filing a complaint on the Better Business Bureau (BBB) website, but this might not have the outcome you’re hoping for. Bear in mind that the BBB is actually a private organization that has no affiliation with the US government. They’ll forward your complaint to Action Financial Services, but there’s no guarantee that the agency will address it in a satisfactory manner. What’s more, if your dispute is sent to an arbitrator, then you may give up your right to take Action Financial Services to court.
How to get Action Financial Services off your credit report
If your credit score is suffering as a result of Action Financial Services debt, then don’t worry. You can get their collection accounts off your credit report by following these steps:
- Tell Action Financial Services to stop calling you
- Send a debt verification letter
- Explore your repayment options
- Send a credit dispute letter
- Request a goodwill deletion
- Negotiate for “pay for delete” or a debt settlement
- Get help from a credit expert
Everyone should follow the first two steps. The ones after that are situational, and you should follow the ones that are appropriate for your circumstances.
Before you do anything else: Ask Action Financial Services to stop calling you
It’s important to keep a paper trail of all your communications with Action Financial Services, so make sure to only communicate with them in writing. If you ask them to stop calling you and only communicate via letter or email, then they’re legally obligated to do so. 7 This should be your first step.
Make sure to date your letters and send them by certified mail. If you’re not sure where to start, then check out the sample letters provided by the CFPB.
Next: Send a debt verification letter
Sending a debt verification letter asking the collection agency to provide evidence of your debt is one of the quickest and easiest ways of getting rid of a debt item in your credit history. It’s also an easy way of figuring out if the debt collector is a scam agency.
When you send a debt verification letter, third-party collectors like Action Financial Services are required by law to show evidence that you have an outstanding debt. If they can’t do that, then they have no choice but to delete it from your records. 8
Once Action Financial Services receives your debt verification letter, they’re also required by law to stop contacting you about your debt until they’ve sent you evidence that you actually owe it. 7
A lot of the time, debt collection agencies don’t have adequate evidence, whether you owe the listed amount or not. If Action Financial Services isn’t able to verify your debt (or if you discover that the debt is more than a few years old), then proceed to the next step.
On the other hand, if it turns out that your debt is both legitimate and recent, then proceed to one of the steps after that, depending on your circumstances.
If you owe federal student loan debt: Explore your repayment options
If you’ve defaulted on your federal student loans and they’ve been transferred to a collection agency, then you have two main options for getting Action Financial Services to stop contacting you: loan rehabilitation and loan consolidation.
Student loan rehabilitation
Student loan rehabilitation is a government program that’s designed to help you get out of default. To rehabilitate your loans, you need to make nine monthly payments within 20 days of their due date during a ten-month period. 9
When you rehabilitate your loans, Action Financial Services will stop their collection efforts and the record of your default will be removed from your credit report. 9 Rehabilitation brings your student loans out of default and renews your eligibility for certain benefits, such as deferment, forbearance, alternative repayment plans, and loan forgiveness.
This is an opportunity for a fresh start, but be warned: rehabilitation is a one-time offer and won’t be an option if you default on your loans again.
Student loan consolidation
Unlike loan rehabilitation, loan consolidation won’t remove the default status from your credit history. However, it will allow you to get your loans out of default, and it’ll stop Action Financial Services from contacting you to collect payments.
Like other types of debt consolidation, student loan consolidation involves taking out a new loan to repay your debts. To qualify, you’ll need to agree to an income-based repayment plan or make three consecutive, on-time, full monthly payments before consolidation. 9
If the debt is old or invalid: Send a credit dispute letter to the three credit bureaus
You can write a credit dispute letter to Experian, Equifax, or TransUnion to delete the collection account from your credit report if you believe your debt went into default by mistake. It’s a good idea to also send a letter to Action Financial Services and your original loan provider so that all parties have complete information when investigating the matter.
When you dispute the item on your credit report, make sure to send along any supporting documentation that you have on hand. Credit bureaus have 30 days to respond to your dispute. If they don’t, then they’re legally obligated to remove the debt item. 8
If you’ve already paid the debt: Request a goodwill deletion
If your outstanding debts were sent to Action Financial Services but you later paid them off, you may be able to get the collection account removed from your credit report by asking for something called a goodwill deletion or goodwill adjustment. To do this, send a goodwill letter to Action Financial Services explaining the circumstances that led to your delinquency.
This is usually only an option if you’ve already paid the debt in full, and it’s more likely to work if your missed payments were caused by something outside your control like an unexpected layoff or expensive medical bills.
You’ll want to include any supporting evidence or documentation you have, including:
- An explanation for why your payments were late
- Records demonstrating that you usually pay your other debts on time
- Examples of how the negative mark is affecting your life, such as making it difficult for you to take out a mortgage
You can also call Action Financial Services on the phone, although there’s a chance that the person you end up speaking to won’t have the authority to make changes to your records.
It’s important to bear in mind that sending a goodwill letter is a long shot, and Action Financial Services is under no obligation to change your report. However, it doesn’t cost you anything, so there’s no reason not to try.
If you haven’t paid the debt: Negotiate “pay for delete” or a debt settlement
If you still owe the debt and it’s too soon to get it removed from your credit report, you’ll probably have to pay it. However, with pay for delete or a debt settlement, you might be able to convince Action Financial Services to settle for less than the amount you owe or remove their record of your debt after you’ve paid it.
If you have federal student loan debt, you should be aware that these approaches are relatively unlikely to work—it’s harder to negotiate when you have this type of debt, as compared with other types like credit card debt. That said, there’s still no harm in trying.
Pay for delete
A pay-for-delete request is different from a goodwill letter because it applies to debts that you haven’t yet paid off. It’s an exchange where you agree to pay off your debt, and in return, Action Financial Services promises to remove the negative mark on your credit report that’s associated with it.
The first step is to use a pay-for-delete letter template to draft your letter and send it to Action Financial Services. It’s very important to get written confirmation that they’ll remove the collection from your credit report once you’re all paid up.
Once you’ve received written confirmation from Action Financial Services and paid your debt, you should monitor your credit reports to make sure that they follow through. If the collection account is still on your credit report in a couple of months, then follow up with them and use the letter they sent you to remind them of their obligation.
Debt settlement
If you’ve defaulted on your debts more than once or you owe a very large amount, then there’s a chance that Action Financial Services will accept less than the full amount you owe (a practice known as debt settlement).
As mentioned, if you owe federal student loan debt, you should know that this type of debt can be very hard to settle, but it’s not impossible. However, don’t expect to have most of your debt written off. A standard settlement offer will waive collection fees and sometimes some of the interest, but according to documents from the US Department of Education, it can’t waive more than 10% of the actual loan amount (the principal). 10
Before negotiating, you should carefully review your financial situation and come up with a realistic amount to offer. If you want, you can negotiate through a debt settlement agency, but be wary of scammers and avoid companies that charge you large amounts upfront.
Alternatively, you can just speak to someone from Action Financial Services over the phone. However, you should make sure to get the agreement in writing before you make any payments.
Bear in mind that debt settlements still hurt your credit score, and like most other negative marks, they’ll remain on your credit report for up to seven years. 11 With that said, lenders will probably look more favorably on a settled debt than a debt in collection.
If you feel overwhelmed: Get help from a credit repair company
If you feel like you might be in over your head, then seek professional assistance from a credit repair expert to remove Action Financial Services collection items from your credit report. This can save you time and help you avoid the frustration of trying to remove their negative marks on your own.
