collections overview
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TRANSCRIPT
Debt CollectionAn Overview
Presented By: Satyakam Biswas
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
Debt collection is a simple mean that pursues payments on debts owed by individuals or businesses
Debt collection can be done in various ways:1. Legal notification 2. Lettering 3. Via Phone Calls4. Legal proceedings
Debt 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
What is Debt Collection?
Types of Collections
CollectionsFirst Party Collections
Third Party Collections
First / Third Party Collections
Consumer Collections
Commercial Collections
PLCC’s TelecomMedical
BillsAuto/Home
LoansIT &
AutomationWaste
ManagementFinancial Services
Login Hour based billing modelContingency / 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
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 accountsAccording 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.
Top 10 collection Agencies in US
1) N
CO Gro
up In
c. – Hor
sham
, PA
2) O
utso
urcin
g So
lutio
ns In
c. –
St. L
ouis,
Misso
uri
3) G
C Ser
vice
s Lt
d. P
artn
ersh
ip –
Houst
on, T
X
4) In
telli
Risk M
anag
emen
t Cor
p. –
Colum
bus,
OH
5) R
isk M
anag
emen
t Alte
rnat
ives
Inc.
– Dul
uth,
GA
6) D
un &
Bra
dstre
et R
MS – B
ethl
ehem
, PA
7) A
llian
ce O
ne R
M In
c. –
Exto
n, P
A
8) N
atio
nwid
e Cre
dit –
Ken
nesa
w, GA
9) C
onve
rgen
t Res
ourc
es In
c. –
Atlant
a, G
A
10) A
legi
s Gro
up LP
– Hou
ston
, TX
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
Top 10 Collections Agencies by Revenue - FY2002
Annual Revenue
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.
1. Trans-union2. Equifax3. Experian
Why is Credit Reporting Important?
•Credit reporting helps in repairing consumers credit score•Helps build consumers credit worthiness•Every time an account is paid off, has to be reported to the Credit Bureau• In third party collections credit reporting Is usually done by third party collection agency• In the case of First Party Collections reporting is done by the original creditor• Post paying off the account, even the consumer can contact any of the credit bureau and get the status updated with the help of the final notification from the collection agency. This is more relevant to third party collections scenario, usually when a consumer settles or pays off his/her old outstanding debt
SOMSOM is the abbreviated form of sources of money and is a very important tool for any collector to liquidate an account efficiently.A seasoned collector will always do fact finding and will try to find as many sources of funds which would help him liquidate his account, before the debtor finally says NO Money.
Here are few money sources for U.S citizens:1. Salary ( If employed) otherwise income from enterprise.2. Unemployment check( Incase debtor is unemployed)3. Disability check ( In case of disability filed by debtor)4. 401K ( retirement benefit)5. Potential money from any pending lawsuit6. Refinance / equity loan out of current mortgage7. Severance pay 8. Cash Advance from POE9. Advance out of employee’s active 401k10. Deferring of car payment11. Garage sale
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.
1. CBP ( Check by phone)2. Credit Cards3. Online Payments ( if option avail on agency website)4. Wire Transfer ( western Union/Quick collect)5. Cashiers Check via Fed-ex6. Money order/ Money gram/ Check in the mail
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.
1. Total Due2. Past Due3. PIF ( paying off the complete balance)4. SIF ( settlement, as per client’s guideline)
Note: PIF/SIF is maintained as per client as original creditor is the owner of the account.
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
1. BIF ( Demand balance in full)
2. PPA ( Partial payment arrangement)
3. SET + Payment options
4. SIF ( One payment)
Strategies used to liquidate accounts
1. Lettering, post sending dunning letters on accounts2. Evaluate the average payment size of an account and decide dialing strategy
accordingly3. Use of dialer for small ticket size accounts and manual dial for high balance
accounts4. Evaluate the connect and contact rate on accounts time to time, this further
helps in evaluating what accounts to be dialed when5. Creation of blaster campaigns and running campaigns on dialer with auto-
messaging on. This will increase portfolio’s inbound traffic6. Skip trace high balance accounts. This can be done with the help of skip
waterfall process7. Evaluate skip trace vendors using test batch option8. Request CBR’s on high balance/ High score accounts9. Give priority to Inbound over outbound
Strategies used to liquidate accounts..Contd.
10. Extensive documentation is the key to success11. Capture and document every inbound number on accounts12. Perform Employment verification if POE number available13. Engage consumer in partial payment plan and perform merchant verification if
possible14. Last but not the least, must carry an attitude to collect which will help you be a
better collector.
Collection call model
OpeningIdentifying
consumer/ Verify details
Disclosing account details
Fact finding/ Getting facts on
the table
Find sources of money/ Negotiate
If debtor promises to
pay
Make a promise on the account/Change
collection status
Close the call
Negotiate with consumer
If NoIf Yes
Collection Pyramid
$$
Average Payment Size
Promise to Pay
Right Party Contact
Contact
Thank You