The new “hot topic” in the collections industry right now is
dormant collections, and debt collectors and collection agencies across the
nation have begun to focus on dormant collections accounts as a valid revenue
source. However, this “hot topic” is
also a topic that is fraught with concerns over regulation and litigation, and
collectors should approach it cautiously, being sure to remain in compliance
with Federal regulations at all times. With
careful research and properly managed dormant collection accounts, these
potential revenue sources can help a collection firm offset the costs of
litigation and resources needed for asset searches.
When beginning a dormant collection, a collection agency or
collection law firm should first validate the judgment. Often, this is easier said than done. In many cases, the balances shown on the court
documents are incorrect, the information doesn’t line up, or there are other
issues that might cause compliance issues if not thoroughly validated.
After complete and thorough validation of the debt and the
debtor’s responsibility to pay it, the firm should then find a solid source for
asset location. It’s important to
remember in this step that accuracy rates for even the best asset locator sources
are rarely more than 20% and often closer to 5%. This inaccurate information can end up costing
the creditor or collection holder even more valuable time and money.
Collections firms who specialize in dormant judgment
validation and collection will often have the resources to perform skip tracing
and asset location without hiring a third-party firm. However, these searches take considerable
time and money, two resources that many collections firms have little of. Once a dormant judgment is established,
validated and located, the collection firm can then use tactics such as wage
garnishments to ensure that the collection will be processed and time and money
are well spent.
No comments:
Post a Comment