Banks and Credit Unions issue variety of loans to businesses and individuals in form of mortgage loans, credit card balances, overdraft fees, loans to businesses, car loans, student loans and variety of other products and transactions. Most banks follow up themselves on these past due accounts for the first few months. Smaller transactions like the fees for overdrawn checking account (Share draft account or Demand deposit account) and smaller credit card debt are transferred to collection agencies after 60 to 90 days of non payment, however bigger ticket loans like the mortgage and student loans are transferred after a longer period.
A collection agency experienced in recovering money for financial institutions understands the importance to recover maximum money for banks while keeping a diplomatic yet firm approach when collecting on these debts. Banks and Credit Unions do not want to loose customers, therefore recovery needs to be done in a careful and diplomatic manner. Credit unions especially are more vulnerable to a bad PR because they operate regionally and not nationally. An agency working for a financial institution needs to function as an extension of the institution and operate within legal guidelines specified by the government which include FDCPA (Fair Debt Collection Practices Act), FCRA (Fair Credit Reporting Act), TCPA (Telephone Consumer Protection Act) and countless State and local laws that exist.
Involvement of a collection agency for all kind of loans is a game changer. The staff of a collection agency is well trained on how to recover money from people, after all that’s what they do all day long.
When communicating with the debtors of financial institutions, a debt collector needs to clearly convey the repercussions of not paying the debt which includes further deterioration of his/her credit history. A bad credit history may limit his ability to obtain loans in future and even if he qualifies, he may be subjected to a higher interest rate. Moreover, few employers run credit history checks on their prospects at the time of hiring.
A collection agency may even take this account to a court and seek a judgement which may permit wage garnishment, amount taken from his bank account and all these legal costs could possibly be added on top of the amount which was already due. A collection agency should clearly communicate to the debtor that by not making the payments now, the collection demands will not magically go away, but will continue for a long period and possibly get intensive. Debtors should also be offered to make payments in installments and in a few cases if his debt can be settled for a slightly lower amount ( provided a “Settle in Full” agreement is in place).
For financial institutions it is important to select an agency which is medium or large sized and has these facilities / safeguards:
1. A web-portal to submit accounts and report payments.
2. A proactive customer support team.
3. Payment Card Industry (PCI DSS) complaint systems.
4. Safe storage of sensitive data.
5. Data center located within USA and debt collectors preferably located in USA.
6. Limited access to sensitive data, not everyone in the collection agency should have access it.
7. IT Servers are regularly patched for security and stability.
8. Encryption is applied wherever required ( ex: passwords).
9. An experienced collection staff and a good network of attorneys nationally.
10. Staff is trained periodically on how to securely handle client’s data.
Are you looking for a collection agency which has significant experience in financial industry. Contact us for more information.