The deck is stacked against debt collectors today.
There is a long list of confusing laws that have been put into place to protect debtors from debt collectors. There is also a nearly endless amount of advice and education available to debtors on everything from debt consolidation loans to tips and tricks for deceiving and avoiding legitimate debt collectors.
There was a popular article written by Kerri Anne Renzulli and published by Money in July of 2014 that recommends “9 Ways to Outsmart Debt Collectors” that was likely seen as a slap in the face by many in the collections industry. Interestingly, many of the nine points the article discusses could also be used by debt collectors.
In order to produce the best possible collections results, you should always be aware of what kind of advice your debtors are receiving. This will give you edge when you have responses already prepared for each tactic.
Here are Renzulli’s “9 Ways to Outsmart Debt Collectors” from the standpoint of a debt collector:
“1. Don’t Get Emotional”
Regardless of which side you are on, it’s obviously never a good idea to get emotional about a debt collection situation. However, the debt collector has a lot more to lose by dipping into the pool of emotions. Make sure you keep your cool at all times, even if your counterpart doesn’t.
“2. Make Sure the Debt is Really Yours”
This is good advice to protect debtors from incorrect or illegal collections. But if you are collecting on a legitimate debt, there is no reason for this question to catch you off guard. Know who you are collecting from and as much as possible about their history with your company.
“3. Ask for Proof”
Once again, this is great advice to protect against third party collection agencies that buy massive amounts of debt in bulk because they usually have incomplete or inaccurate documentation. Asking for proof is the go to response for most every debtor today because they know you have to provide it and you may not be able to.
Avoiding this trap is easy. Just have proof of the debt ready to go before you even start the collection process.
“4. Resist the Scare Tactics”
Renzulli advises readers to hold strong and ignore any scare tactics a collector might impose on them. Changing one simple word can make this speak true for debt collectors as well: Resist using Scare Tactics.
As someone collecting a legitimate debt in an ethical manner, the law will be on your side as long as you follow it. There is no need to impose any type of threats or scare tactics.
“5. Be Wary of Fees”
Here we have another bit of advice that applies equally to both sides. While debtors should be aware of the fees they are being charged for debt servicing, debt collectors are required by law to be reasonable about the fees that they charge.
When most debtors attempt to negotiate, they are usually expecting a negative response from the debt collector. This is a great chance to surprise them with your willingness to work out a deal. Let them know you are open to being flexible on payments and terms and you might just reach a mutual agreement.
“7. Call in Backup”
If things take a turn for the worse, Renzulli advices debtors to hire an attorney. Collectors should be taking a similar approach in hiring a collection agency with legal experience. You might even want to do this proactively.
“8. Know the Time Limits”
Many debtors will simply drag their feet in an attempt to reach the point where their debt is time-barred. Make sure that you are aware of the statute of limitations on an outstanding debt in your state.
For example, the statute of limitations on debt collection in California for written contracts is only four years. Make sure that your debt collection procedures will allow you to put the entire process behind you well before that time limit.
“9. Don’t Get Tripped Up By Your Own Good Intentions”
What Renzulli means here is that debtors should beware of allowing themselves to fall prey to unethical debt collection practices. At the same time, debt collectors need to be cautious of debtors that are attempting to string them along. Don’t fall prey to this just because you want to believe in someone’s good nature.
What we are talking about here is not necessarily a matter of two sides trying to outsmart each other. If both sides approach the issue with good intentions of working toward a mutually acceptable solution, neither side has anything to worry about. Just be cautious of all the unethical intentions that exist in the world.