This document provides an overview of debt collection, including:
1. Defining debt collection and describing the types, including first/third party collections and different types of debts.
2. Outlining key laws governing debt collection practices in the US, such as the Fair Debt Collection Practices Act.
3. Describing strategies used by collectors to liquidate accounts, such as lettering, skip tracing, engaging consumers in payment plans, and maintaining documentation.
2. Agenda Debt Collection – Definition Types of Collections A Flowchart Debt Collection – Legal Aspects Top 10 Collection agencies in US Credit Bureaus and Credit Reporting Sources of Money (SOM) Payment Options Strategies used for liquidation Collection Call Flow Collection Pyramid
3. What is Debt Collection? Debt collection is a simple mean that pursues payments on debts owed by individuals or businessesDebt collection can be done in various ways:1. Legal notification 2. Lettering 3. Via Phone Calls4. Legal proceedingsDebt collection can be either done by original creditor by their in house collections department or by any third party collection agency appointed by original creditor
5. First / Third Party Collections Consumer Collections Commercial Collections PLCC’s Telecom Medical Bills Auto/Home Loans IT & Automation Waste Management Financial Services Login Hour based billing model Contingency / Commission based billing model Pre charge off accounts primarily 0-180 days Post Charge off accounts Small ticket size/ Dialer Environment Big ticket size/ Dialer + Manual
6. Debt Collection Laws There is a federal law that dictates how debt collectors may—and may not—deal with consumers. It’s called the Fair Debt Collection Practices Act (FDCPA), and it applies to personal debts, including money owed for an auto loan or home loan, for medical care and for credit card accounts According to the Federal Trade Commission (FTC), under the FDCPA, a debt collector: 1. May not call you before 8 a.m. or after 9 p.m.; 2. May not call you at work, if the debt collector knows that your employer does not approve of such phone calls; 3. May not harass, oppress or abuse you; 4. May not lie, and may not falsely imply that you have committed a crime; 5. May not use unfair practices to try to collect a debt; 6. Must identify himself or herself to you on the phone; and 7. Must honor a written request from you to stop further contact.
8. Credit bureaus’ in the U.S. There are three major credit bureau’s in the US and then there are other sub bureau’s which fall under these three. Trans-union Equifax Experian
11. Every time an account is paid off, has to be reported to the Credit Bureau
12. In third party collections credit reporting Is usually done by third party collection agency
13. In the case of First Party Collections reporting is done by the original creditor
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15. How do Consumers Pay? Consumers can make payments on their account through various sources and are mentioned below as suggested by most of the collectors in the US. These payment methods are basically lined according to urgency created by collectors on consumer's accounts. CBP ( Check by phone) Credit Cards Online Payments ( if option avail on agency website) Wire Transfer ( western Union/Quick collect) Cashiers Check via Fed-ex Money order/ Money gram/ Check in the mail
16. Payment options: First party Client Here are few payment options which are usually offered by debt collectors while working for any first party client. As customer retention being the prime focus, at times collectors find themselves restricted in terms of creating urgency. Total Due Past Due PIF ( paying off the complete balance) SIF ( settlement, as per client’s guideline) Note: PIF/SIF is maintained as per client as original creditor is the owner of the account.
17. Payment options: Third Party Client Here are the payment options which are usually offered by debt collectors while working for any third party client. This is specific to third party call model BIF ( Demand balance in full) PPA ( Partial payment arrangement) SET + Payment options SIF ( One payment)
18. Strategies used to liquidate accounts Lettering, post sending dunning letters on accounts Evaluate the average payment size of an account and decide dialing strategy accordingly Use of dialer for small ticket size accounts and manual dial for high balance accounts Evaluate the connect and contact rate on accounts time to time, this further helps in evaluating what accounts to be dialed when Creation of blaster campaigns and running campaigns on dialer with auto-messaging on. This will increase portfolio’s inbound traffic Skip trace high balance accounts. This can be done with the help of skip waterfall process Evaluate skip trace vendors using test batch option Request CBR’s on high balance/ High score accounts Give priority to Inbound over outbound
19. Strategies used to liquidate accounts..Contd. Extensive documentation is the key to success Capture and document every inbound number on accounts Perform Employment verification if POE number available Engage consumer in partial payment plan and perform merchant verification if possible Last but not the least, must carry an attitude to collect which will help you be a better collector.
20. Collection call model Identifying consumer/ Verify details Disclosing account details Opening If debtor promises to pay Fact finding/ Getting facts on the table Find sources of money/ Negotiate If Yes If No Make a promise on the account/Change collection status Negotiate with consumer Close the call
