The debt collection industry can no longer treat consumers with the one-size-fits-all approach that it has utilized in the past. Between regulations like the Fair Debt Collection Practices Act and the evolution of the consumer and their ability to utilize technology, the industry has evolved and now requires a somewhat customized approach to each and every situation.
Today’s successful debt collection agencies are evolving with the industry and have begun to create policies and procedures that allow them to treat each situation in a completely unique manner, while still making the most of their limited resources. While this customized approach might initially seem like a whole lot more effort, the results have been staggeringly successful.
Processing Background Information
One of the first places that many collectors look to begin the process of customizing their collections process is in obtaining as much background information as possible about the consumer they are dealing with. Knowledge is power, and the more you know about a debtor’s situation, the easier it will be to understand what makes them tick and figure out a way to settle the debt quickly and efficiently.
Obtaining background information could be as formal as hiring a company to investigate debtors or as simple as looking them up on social media. But whatever route you choose to go, the more knowledge you have, the better your chances of settling the debt.
Policies and Procedures
Of course, all the background information in the world won’t matter if you don’t have policies and procedures in place to deal with all of the different types of situations that will arise from having more information.
Does your company conduct its collection process differently if the debt is the result of the consumer suffering from a terminal disease? How do you handle situations that involve spousal abuse? Do you have a plan in place to handle debtors that have gotten into deeper trouble and are currently in prison?
There are hundreds and hundreds of different debt collection scenarios, and the more knowledge you have about a situation, the more likely you are going to be to customize your approach to it. Make sure you have some basic guidelines in place so that you aren’t making up that approach on the fly.
You should also have an account scrubbing policy in place that will group certain types of collection situations together and avoid any duplicate accounts in your system. There is fancy software available to handle this in an advanced way, but many times just taking some time to look through your records works just as well.
Understanding Credit Reporting
Whether or not you report an outstanding debt to a credit reporting agency is one of your largest bargaining chips when negotiating a settlement with a consumer. Depending on what you know about their situation and what your policies and procedures state, the threat alone of reporting a delinquent account on their credit history is often enough to reach a settlement.
Of course, there are also many rules and regulations that come along with credit reporting, so you should always make sure you are on the right side of any potential legal or ethical issues.
Statutes of Limitations
Another issue that you will have to consider when dealing with a customized approach to debt collection is understanding the statutes of limitations regarding a particular debt. There are many different approaches to handling time barred debts, but all of them should stress that you want to abide by all federal and state regulations.
At the end of the day, taking a customized approach to each and every debt collection scenario really can be a whole lot more work. But when you take the time to get to know the consumer and understand the situation, you will be shocked at how much more efficient you become at collecting payments and settling accounts. And that is the overall goal, right?