Credit Unions issue a variety of loans in the form of auto loans, student loans, mortgage debt, small business loans and credit card loans. They are also entitled to overdraft fees when withdrawal from a bank account exceeds the available balance. However, many customers are unable to return the principal amount and the accrued interest to the credit union. Even those customers who fail to pay the overdraft fee, often dispute it. Unfortunately, accounts receivable is an ongoing problem for the Credit Unions all across the country.
Nearly all credit unions have an internal team which follows up with customers who are running behind their payment obligations and attempts to recover money from them. Depending on the type of loan and internal financial policies, an account is considered delinquent after it is more than 60 to 180 days past due. However, many of these accounts are tough to recover and often become too risky. Such delinquent accounts are forwarded to a third-party collection agency.
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The efficient recovery process of a collection agency helps credit unions to maximize their profit by reducing charge-offs while maintaining positive customer relations.
Credit unions are known for innovative products and friendly staff. Unlike big banks which have a nationwide presence, credit unions cater a limited region and usually have less than 5-10 branches. Debt recovery is a very tricky situation for credit unions in particular. If they apply too much pressure on customers to recover the money, they can get upset. They may quickly spread a negative word in the community where the credit union is located. Having bad reviews in the form of word of mouth, media or online reviews on platforms like Google may do instant damage to the credibility of a credit union.
Hiring a collection agency takes the pressure away from credit unions since demands are made in the name of the agency. Equipped with advanced collection techniques and tools, the staff of collection agencies use a diplomatic approach to recover money from debtors. According to the federal debt collection laws, debt collectors are prohibited from using abusive, unfair or deceptive practices to collect debts. Debt Collectors work with debtors by maintaining a respectable approach yet very effective. Debtors who cannot pay the entire amount are offered to make payments in installments.
Calls originating from Collection Agencies are impactful and effective. Collection agents are seasoned professionals, recovering money for their clients all day long. They are well trained on how to handle debtor excuses, and their mild pressure tactics are just adequate to collect money from those hard to handle debtors. Collection agency for Credit Union is also required to follow certain security standards to ensure the safety of client data.
A credit union collection agency will offer a variety of services including Collection Letters, Collection Calls and Filing a Legal Suit if necessary. They offer both fixed fee and contingency services.
| Credit Union Collection Agency Services Include |
| Collection Letters Service |
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| Collection Calls Service |
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