Foreclosures Have Been Ruled By FDCPA As Debt Collection

Image courtesy of AKZOphoto / www.flickr.com

It is common knowledge that the housing market took a large turn for the worse over the past few years.  More and more foreclosures have put homeowners out of their home and placed banks scrambling to sell houses they thought were already sold. 

Recently, the Sixth Circuit U.S. Court of Appeals passed a judgment that made foreclosures on mortgages an act of ‘debt collection.’ This was done under the Fair Debt Collection Practices Act and it reversed a decision made by the lower courts. 

This decision basically states that third parties that are working through the foreclosure process need to abide by the FDCPA laws and regulations.  The decision was made in response to Glazer V. Chase Home Finance, LLC.  Glazer inherited a home only to discover there was still an active mortgage that Chase held.  Six payments were missed and  a law firm was contacted to start the foreclosure proceedings. 

The mortgage wasn’t owned by Chase, nor did it originate there.  Fannie Mae was the mortgage owner and Chase was assigned to service the originator.  This made the entire process more complicated for Glazer to find details of the proceedings out and made it difficult to settle the problem. 

Glazer sought a lawsuit for FDCPA damages but an Ohio judge sided with Chase and their lawyers instead and dismissed the case entirely.  The panel stated Chase wasn’t a debt collector; however the lawyers working to collect on the lien were considered debt collectors and expected to follow the guidelines of FDCPA.

This means that there are a set of regulations and guidelines mortgage collectors will be expected to follow.  Likewise debtors will also be expected to follow the laws and regulations.  With this kind of formalities imposed on the system there is expected to be smoother transitions and hopefully less homeowners put out of their home.  

Key Ways To Deal With Collections, Receivables and Credit

Image courtesy of freestockphotography.com.au

A well-managed accounts receivable can be one of the biggest assets to a company.  It can give them the opportunity to leverage cash quickly and efficiently when records are well-kept and when working capital is needed.  For a long time this department was viewed as a basic necessity.  Recently, companies are beginning to look at it in a much different light.  It is becoming widely accepted that the better managed accounts receivable the better financial opportunities a company will have. 

Though a company may deal with either consumers or commercial companies, and therefore either many small invoice balances versus a few large invoice balances, the fundamentals of each are the same.

The Three Steps Of Accounts Receivables Are:

• Process of Remittance- methods of payment or an automatic process will be set up. 
• Management of Credit- This will include informing client of policies, checking credit and getting approval as well as maintenance of credit. 
• Collecting- This step can include technology, different techniques as well as ways to motivate or monitor both external and internal agents. 

It’s important that you don’t underestimate the role that great customer service plays in any of the above processes.  Having a good relationship with the client throughout can help to speed the process up.  It’s a good idea to incorporate a customer focused approach into each of the above steps for accounts receivable. 

Not so long ago there wasn't much done on credit, so accounts receivable wasn't as essential as it is to today’s companies.  These days, however marks a difference in how we view cash flow.  A healthy portfolio of companies that have credit lines means the company has the opportunity to collect and increase their cash flow.  Likewise, companies expect to be able to purchase on a credit line and pay as needed so this creates a new way of looking at cash flow.  

What Are Some Of The Best Ways To Collect On Old Debts?

Best Way To Collect On Old Debts

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

When receivables reach the 60 day mark, it’s time to make some quick decisions so they can get collected on quickly and with little expense.  If you outsource the collection you will of course pay a fee, but if you attempt to get it done yourself and it takes too long you can wind up having a credit rating drop substantially.  

If you have a close hand on the debts owed to you then it may be an option to try and figure out what type of people you are trying to collect from.  There are many times that you might just be dealing with someone that is slow to pay and there are other times you could be trying to get blood from a stone.  These differences can help you make the decision on what to do about the debt.  The slow to pay person may benefit from more serious urging in the form of a letter and phone calls, while the person without any money or no response probably needs  to be outsourced. 

There are a few tips that can help make it easier and insure that you get more money.  Some of them are as follows:

• Keep a stack of form letters and notes that you can easily fill in the blanks and send out. 
• Always charge a percentage for late payments and for attempts at collecting. 
• Consider converting into promissory notes. 

Why consider turning debts into promissory notes?

When you take the time to convert an old or bad debt into a promissory note you are technically changing it into a current obligation from something that was nearly forgotten.  Banks will look at this much differently than a debt they see you haven’t been able to collect on. 

Transferring several invoices for bad debts into one cohesive promissory note is a clean way to eliminate confusion about what is owed to whom.  You can also stipulate in the promissory note the coverage of different fees such as collection or attorney fees.  You will need to get the client to sign the note which will also let you know their intentions.  If they don’t sign it’s a good time to turn them over to a collections law firm or agency.  

What Are Some Key Traits And Learned Techniques of Great Debt Collectors?

Good Debt Collection: Something You Can Learn Or Are You Born With It?

Do you ever wonder what makes one debt collector more successful than another?  Ever consider what they do to get receivables cleared and money coming in?  What does a successful company do differently than one that isn't?   Is it something they have a natural talent for or did they go to school for it?  With several discussions and interviews it seems to be a combination of natural personality traits as well as techniques people can use.  When you’re hiring an agency or an individual there are a few things you can look out for that will help insure you work with the right people. 

It is true that there are some natural tendencies people are born with that will help them be more successful at collecting on debts.  Some of the personality traits that lend themselves to debt collection are:

• Self-motivated and able to work independently
• Diligent
• Can separate business from personal affairs
•  Organized
•  Doesn't anger easily
• Can see through situations that are complex

Some of the skills that are taught that help with debt collection are:

• Good skills with customers
• Understanding of company policies
• Sales and marketing
• Basic accounting understanding, especially receivables
• Ability to research claims
• Techniques for skip-tracing

Generally speaking the two largest assets that are going to help a debt collector get accounts receivable in order are patience and perseverance.  Making the calls and sending out the letters consistently until items are checked of your list and money is being deposited.  When hiring debt collectors it’s important to know that perseverance and self-motivation aren't skills that can easily be taught. 

In addition to having some of these natural tendencies there are certainly skills that will need to be learned.  A solid understanding of the legalities of both the state they are working in as well as federal law will go a long way with helping insure the debt collection is done well and properly.