The economic struggles still facing our nation—as well as
the rest of the world—have a significant impact on the collections and accounts
receivables business. As consumers are
unable to find jobs to replace the ones they might have lost, and the housing
market is still keeping many homeowners underwater with mortgages they can’t
afford, the collections industry faces a truly formidable foe. Not only are debtors moving more and becoming
increasingly hard to locate, but the amount of money that goes into resources
to locate a debtor and his/her assets is often not worth the amount of the debt
they owe.
In order to recoup the additional operating expenses
involved in tracking down and filing lawsuits against debtors, collection firms
and collection agencies are looking to dormant judgments—and there are plenty
of them out there. A collections
enforcement firm recently released statistics revealing that up to 80% of
judgments remain unpaid every year. These high numbers of unpaid debt, even after
the debtor had been sued, has caused a serious dent in the pockets of
collection attorneys and collection agencies around the country, and has
prompted such tactics as skip tracing and accessing payroll databases in order
to locate debtors who have changed their address, phone number, and/or place of
employment.
When reopening a dormant collection, it is important for the
agency to spend time thinking about the best chances for recovery so that no
more wasted effort or money is spent toward the dormant account. One way to do this is through the use of asset
locators to determine the debtor’s vehicle and real estate assets. If the debtor has significant assets—either
in the form of real estate, vehicles, bank accounts, retirement accounts,
etc.—the collection agency can then place a lien against these properties or
receive court approval for wage garnishment, making collecting from a
non-compliant debtor a little easier in the process.
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