What are some of the reasons government and municipalities end up with large amounts of debt?

33% of Shoppers are Increasing Their Debt This Holiday Season

While holiday shoppers are showing signs of decreased spending and more control of unhealthy spending habits, 33% of shoppers are still planning to increase their debt this holiday season.  According to a Accenture’s annual holiday consumer spending report, survey results show that consumer expect to spend an average of $582 on their holiday shopping lists and 23 percent plan to spend more than $750.  Over half (52%) expect to increase their spending from last year by $250 or more.

The good news is that according to the survey, most shoppers are better prepared for their spending this year than they were last year, with 51% saying they will pay cash for their purchases.  However, there is still a large number of consumers who state that they will put their purchases on a major credit card—33%, in fact.  This is still one-third of consumers who plan to add to their consumer debt this holiday season. 

According to Chris Donnelly, managing director of Accenture’s Retail practice, “The research illustrates a shift in U.S. consumers’ approach to their holiday spending.  Many consumers are still struggling to balance their household budgets, at the same time that pay raises and bonuses remain in short supply, and they are realizing that this is not a short-term phenomenon.  Consumers will remain resistant to the impulse purchase, and retailers will have to work harder to secure that extra spend by having a unique product, service or experience, and being clear on the value to the customer.”

Some of the ways consumers are coping with having less money to spend and attempting to spend money more wisely include an increased amount of online shopping, where items can often be found at better prices.  Shoppers are also taking more advantage of discounts and promotions offered by retailers in an attempt to lower their overall spending during the holiday shopping season. 

Much of Student Loan Debt is Not Being Paid Back, According to a Recent Report

The percentage of unpaid debts in the U.S. isn’t nearly as dismal as it was a few years ago—or even last year—except for one type of debt: student loans.  While the percentages of total consumer debt fell this year, as well as delinquency rates for that debt, student loan debt has been steadily growing for the past 8 years, with delinquency rates on the rise, as well.  In whatever way you look at it, the outlook isn’t a positive one.

From a report released in September, outstanding student loan debt now totals $956 billion and is still rising.  Approximately half of that amount is new student loan debt that is being taken on, while the other half is defaulted loans that are now showing up on credit reports across the country, affecting the credit of thousands of Americans.  It is now calculated that some 11% of student loans are now 90 days delinquent, which is considered “serious delinquency” by most credit standards.  In addition, many student loans are in deferment based on the debtor’s circumstances or continued enrollment in school, so these rates could be even higher once deferment periods end.  Since deferment is a limited prospect, it remains to be seen what will happen when it ends for the hundreds of thousands who have taken out more in student loan debt than they can afford to pay back. 

Since student loan debt is one of the few types of debt that cannot be discharged in bankruptcy, it remains to be seen what effect student loans will have on the economy if the default rate continues to rise.  Meanwhile, collections agencies and collections attorneys are watching closely to see just what role they will be playing in the process and whether student loan debt will be the next big debt bubble to hit our nation.  

What should my collections agency use automated software and how will it help us run more efficiently?

When Using a Law Firm to Collect Unpaid Debts Makes Sense

Let’s face it—consumers who have failed to pay their debts and are who are past the point of worrying what it will do to their credit aren't going to always pay attention to collection calls and letters, particularly if they have lost a job, changed their phone number or moved.  In situations when you have tried every method of communication possible and the debtor still refuses to work with you, it might be time to use a law firm to collect on the unpaid debt, especially if the debt that is owed to you is a significant amount of money.  

  

First of all, a letter or phone call from a law office tends to carry a lot more weight in the mind of the debtor than a letter from a collection agency.  Since most collections agencies have their calls and letters on an automated process, while the communication might be sternly worded, most will not go through with judgments or lawsuits in order to receive payment.  A lawyer, however, is fully prepared to initiate a lawsuit on your behalf when the debtor refuses to pay or make payment arrangements. 

This is why lawyers who specialize in debt collection are more much more effective than a collection agency tends to be.  Therefore, if the debt is significant, you should hire a debt collection attorney.  When you do hire a lawyer, you should be prepared to show up in court and go through the entire legal process (including court fees and retainer fees) to collect on the debt that is owed to you. 

However, using a law firm is usually a last ditch effort because law firms often demand a 50-50 or one-third split of the collected debt.  Also, since lawyers tend to handle specific types of debt collection cases, it might be difficult at first to find the right attorney who specializes in the types of debt owed by your nonpaying clients. 

What is the current situation with student loans in default in the United States this year?

Using Technology to Increase Efficiency in the Collections Industry

The collections industry has come a long way in its technological prowess, making the process of collecting unpaid debts easier across the board, despite tough economic times.  With a wide scope of technological platforms and software available, your collections agency can operate smarter and more efficiently, allowing your staff to prioritize and plan their strategies better. 

Many software platforms offer unlimited configuration capabilities and an intuitive user interface. For example, there are platforms which provide each user with a personalized view of the system, depending on their role in your company.  This means that software can be customized depending on who is viewing the screen: Reps and Agents, Supervisors and Manager, Executives and Accountants, Creditors and Debtors, Analysts and System Administrators.  This allows you to organize your collections operations in a hierarchy of groups, collectors, supervisors and external users to define automatic case assignment decision rules.

As additional components, with many software platforms created specifically for the collections industry, you can:

·         Assign collection tasks among different collector groups, agents and back-office support groups.

·   Include creditors and debtors for approval of payment arrangements, deduction or settlement authorizations.

·    Automate case assignment rules among different collection groups and task assignment rules for support groups.

·         Establish special rules and conditions for collecting cases based on each client contract.

·         Trigger alerts according to collections performance, activity or inactivity.

·         Know the best language to contact your debtors.

·        Allow foreign language speaking agents to use the software application in their first language.

·    Assign accounts that have a preferred foreign language to a sub-group of agents that speak their language.

·        Customize application alerts and messages according to user language.

·    Send communications such as letters, emails, SMS and other reminders in the debtor’s preferred language.

·       Set a schedule of automatic and suggested actions according to the case profile.

·      Trigger different collection stages based on case aging and elapsed time from placement.

·       Ensure consistency in planned follow-up actions and maintain fluid communications with debtors.