The Importance of Varied Collection Tactics

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It isn’t enough to simply hire a collection agency that doesn’t use underhanded tactics to attempt to pressure debtors into paying- you need to hire a firm that utilizes a variety of different tactics to increase the chances of acquiring the money owed to you. Tactical variety is important for a number of different reasons.

First, it can be more difficult for a debtor to lodge a legal complaint against a collection agency that uses a variety of low-pressure tactics than a collection agency that hammers them repeatedly with the same tactic. For example, a collection agency that calls their debtors multiple times a day is a much clearer candidate than a collection agency that occasionally calls, occasionally sends a letter, and occasionally makes a personal appearance.

If an agent repeatedly calls a debtor and that debtor never picks up the phone or calls the agent back, it’s clear the phone doesn’t offer a viable form of communication. As such, any agent who persists in calling proves they are simply attempting to pressure their debtors and isn’t attempting to discover a legitimate communication channel with them.

On the other hand, an agent who uses multiple communication channels is more clearly searching for a way to speak with their debtor about their outstanding account. As long as an agent uses a varied set of collection tactics within the bounds of the law, they inhabit a far more legally defensible position.

Varied collection tactics are also more effective than a single tactic, used repeatedly, because varied tactics are more difficult to defend against. A debtor who solely receives repeated phone calls from a collection agent needs to do nothing more than ignore those calls to wall themselves off from taking responsibility for their debts. An agent who uses multiple tactics has a considerably greater chance of getting through their debtor’s defenses and actually making contact. 

Even More Reasons to Work with a Responsible Collection Firm

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There are plenty of reasons why choosing to work with a responsible collection firm is a wise decision. Not only are responsible collection tactics less distasteful than the “thug tactics” employed by many collection agencies, but relatively respectful collection tactics are more likely to produce favorable outcomes with your debtors as well. There’s a third, even more important and even more practical reason to choose a collection agency that does NOT utilize inappropriate tactics- there are laws against the most common debt collection harassment tactics.

At a very base level a collection professional needs to be polite and respectful to the debtors they speak with. Collection agents aren’t allowed to bully or otherwise act in an excessively rude manner to the debtors on their lists. While a collection professional isn’t likely to be reported if they speak in a manner a debtor considers “rude” or “disrespectful,”such a manner will hurt your case if your debtor’s account goes to court.

One of the most common forms of harassing behavior utilized by debt collectors is a continuous string of phone calls at inappropriate times. Now, there’s nothing wrong, illegal or immoral about calling a debtor about the money they owe. But legally speaking a collection agent can only make these calls during a range of hours that have been clearly defined according to state and federal law. The laws dictating when a collection agency can call a debtor differ from state to state, and if an agent repeatedly makes calls during prohibited hours they can be sued for harassment.

Harassing behavior does more than simply lower the chances you will collect from your debtors- it gives your debtors legal ammunition to use against you. 

Why Consumer Debt is the Biggest Threat to Your Business

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If you’re a business owner then you likely feel besieged at all times, from all sides, by threats to the organization you’ve crafted and cared for. None of these threats should be discounted, yet some of these threats are more dangerous than others. It’s natural to feel your direct competition, or changing technology, is the biggest threat to your business. But ultimately the biggest threat to your business is consumer debt.

Consumer debt threatens your business in a variety of ways. From a “big picture” viewpoint consumer debt threatens your business because it threatens the larger economy which you operate within. High levels of consumer debt lead to unstable economic conditions, which lead to conservative policies within banks, the same banks whose loans you rely on to expand your business.

Taking the scale of the discussion down a notch, consumer debt is also dangerous to your business because large-scale consumer debt can reduce consumer purchases of goods and services, including your own. After consumers reach a certain level of debt they simply stop buying non-essentials, and this is especially true during hard economic times where lots of people are either out of work or have had to take on pay cuts.

But on a more 1-to-1 level, consumer debt is an incredible threat to your business if you allow your consumers to open up lines of credit with your company. It might sound like a good idea to open up lines of credit with your customers, doing so provides you with both the initial sale and the miracle of compound interest, but what happens when your customers stop paying that debt? What happens when they default on the debt they accrued with your organization?

Taking Responsibility as a Collection Agency

Collection agencies don’t always have the best reputations, and often with good reason. Many collection agencies utilize a whole suite of underhanded and downright immoral tactics in their quest to receive payment on their accounts. While tenacity is certainly a good thing in the world of debt collection, there’s no need to resort to unsavory tactics in order to close a case. Any collection agency that resorts to harassing, bullying, and applying negative pressure to their debtors is simply proving their lack of expertise in this admittedly challenging field.

Most lenders would prefer to collect from their debtors without their collection representative resorting to these sorts of tactics for a couple reasons. The first of these reasons is moral in nature- most lenders don’t want to be associated with a collection agency that uses tactics they consider underhanded, manipulative or actively insulting.

Yet there is a very good reason why a collection firm shouldn’t resort to acting in such a negative manner- thug tactics rarely work. The more a collection agency attempts to “squeeze” or threaten their debtors, the more that debtor will take increasingly drastic measures to avoid their financial responsibilities. A hefty loan is distressing enough on its own for debtors. Once you add on the constant threats and acts of harassment utilized by some debt collectors you create a negative situation of truly overwhelming proportions.

Considering the fact bullying collection tactics are both distasteful and ineffective, it’s surprising so many collection agencies continue to utilize them. The reason why most agencies stubbornly persist with these tactics is simple- they don’t know any other method to try out. Most collection agencies simply don’t have the training, the experience, or the imagination necessary to figure out a more effective, and less distressing, mode of closing their cases. 

Why the Old Debt Collection Letter Doesn’t Work Anymore

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Decades ago all a debt collector had to do was send along a letter to their prospect, letting that prospect know what they owed and when they owed it by, and that letter would generally do the trick. These days, the debt collection letter just doesn’t work anymore. Not only are you unlikely to receive any money back from any debt collection letter you send out, but there’s a low chance your prospect will ever even read your message. There are a couple of big reasons for this change.

First, you are less likely to have an accurate address where your prospect can be reached. People move around a whole lot more these days than ever before, and as a result it’s likely your prospect no longer lives at the address you would send your letter to in the first place. 

Second, even if your letter is received by your prospect there’s a good chance they will just ignore it, or even shred it. It’s easy to blame this on apathy or discourtesy, but it’s more likely due to the fact people just receive so many messages every day they’ve grown used to simply ignoring what doesn’t interest them. Tack on the fact most people don’t want to respond to a collection letter and you have a recipe for never being read, no matter how many letters you send.

Finally, people just don’t take collection letters very seriously these days. They know that a letter is just a letter, and they are accustomed to receiving more serious forms of pressure from debt collectors, such as phone calls, emails and other more forceful forms of communication. In the big picture, a collection letter is inconsequential to today’s prospect.  

The Proven Formula for Locating Debtors

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Lenders are constantly faced with the unfortunate reality that plenty of their debtors will attempt to go off the grid to avoid the responsibility of paying back their loan. While many lenders have procedures in place for collecting from debtors who are easy to find and contact, most lenders find themselves powerless to track down and elicit payments from debtors who have skipped town. Yet just because a case is difficult for a lending agency doesn’t mean it’s impossible for a professional collections agency.

Debt collection agencies and debt buyers develop proven formulas for finding skipped debtors. This process is referred to as “skip tracing” and it employs many of the same methodologies as private investigators and other professionals use to locate any missing person.

One of the most important skip tracing actions involves contacting and putting an acceptable amount of pressure on the debtor’s contacts. Speaking with all listed employers, all institutions and organizations the debtor is associated with, and contacting any references the debtor listed on their loan application often bears fruit. Even if these connections fail to offer assistance they will often offer up the name and contact information of other leads who may provide access to the missing debtor. The key to receiving useful information from a debtor’s connections and their leads lies in communicating with them in the right manner. E-mail and phone calls are easy to dismiss and to ignore, but in person meetings and attempts at making contact are more likely to result in open and honest communication.

The skip tracing formula will vary from debtor to debtor, but ultimately there are a few key principles which never vary.

The Amazing New Secret of the Debt Buying Industry

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Like all high-stakes industries, the debt buying industry is constantly evolving. Debt buying and collections agencies consistently update their strategies and tactics to further increase the chances of receiving money from debtors. For example, modern debt buyers have learned how to use social networking websites like Facebook and Twitter to remain in contact with debtors, to learn about a debtor’s lifestyle, and to develop relationships with debtors which lead to payment.

Not only are debt buyers using social media websites to perform their work better, they are also using these websites to determine whether a prospect is likely to pay off their debts in the first place.

One of the secrets to effective debt collection lies in being able to distinguish between debtors who are likely to pay off their debts, and debtors who are unlikely to honor their loan’s repayment terms and conditions. Determining whether a debtor is likely to pay back their account balance or not depends on a number of criteria every good collection agency will consider before taking on a case.

For example, an individual who has more than $75,000 in debt, an individual who is in jail, or an individual with no cash-flow and no prospect for building cash-flow is unlikely to pay back their debt, no matter what. On the other hand an individual who lives large, who clearly spends a lot of money on a daily basis, who has a relatively small level of debt, and who has plenty of personal assets and connections with other people who have personal assets, is a prime candidate for effective collections. Social networking and social media sites offer an exceptional way to evaluate these criteria.