National Debt Relief Offers Specific Steps for Handling Collection Calls

National Debt Relief recently shared in an article published June 5, 2016, how consumers can deal with collection calls they get at home. The article, titled What to Do When a Debt Collector Calls, gives people important tips for handling the calls, which can help them get out of a sticky situation.

Los Angeles-Long Beach, CA (PRWEB) July 03, 2016

National Debt Relief recently shared in an article published June 5, 2016, how consumers can deal with collection calls they get at home. The article, titled What to Do When a Debt Collector Calls, gives people important tips for handling the calls, which can help them get out of a sticky situation.

The article starts off by pointing out that being in debt can take a big toll on any person, both emotionally and physically. It is tough to be several months behind on payments and there are times where on top of these, consumers get debt collection calls. This simply means that one of their lenders has charged off the debt on their books and sold it to a debt collection agency.

For the consumers receiving the call, the first thing the article shares is to never panic when they get the call. As soon as they panic, they lose the chance to take the high road and could easily fall prey to the dirty tactics of some collection calls. The collector may bluster and start to make threats with all kinds of dire consequences like calling an employer or family members about the debt.

When faced with this, the article points out that consumers must know their rights under the Fair Debt Collection Practices Act. There are a lot of things listed in that such as preventing the calls from being made repeatedly. The debt collection company can also only make calls out to consumers between 8:00AM to 9:00PM. They are also not allowed to disclose any debt information to third parties like the persons job or even relatives.

It is important that as soon as consumers receive the call, they ask for the details. This can be the name of the collector and their collection company and even the original creditor that held the debt. It is also advisable to ask for the exact amount owed and even how to dispute or verify the account.

To read the full article, click here.

For the original version on PRWeb visit: http://www.prweb.com/releases/manage/collection_calls/prweb13495266.htm



Risks vs Rewards: The Dynamics of Debt Collection

A joint study conducted by the Urban Institute and Encore Capital Groups Consumer Credit Research Institute showed that about 77 million Americans currently have a debt in collections, which amounts to 35% of consumers with credit files or data reported to a major credit bureau1. The Consumer Financial Protection Bureau (CFPB or Bureau) also reports that US consumers have submitted more complaints about debt collection than about any other product or service2. Meanwhile rising cost of collections, the mandate for higher provisions against loan losses, and combating a flat economy is threatening lenders' profitability. IT budgets are strained even as mobility, analytics, and new technology trends hold the promise of streamlining processes and simplifying debt collection operations.

In the light of these facts it is clear that financial institutions simply cannot afford to write off bad debts neither can they ignore customer experience. Even a fractional reduction in loss rates for large consumer portfolios can result in a significant and recurring reduction in credit losses. Maximizing return on investment by minimizing unpaid loans and managing traditional credit risk as well as profitability factors such as customer retention and resources are all key components of a financial institution's Collections and Recovery process. Here are a few trends and challenges that are currently impacting debt collection operations:

  • Collections functions are increasingly the focus of regulators. One of the most impactful regulations comes from the Office of the Comptroller of the Currency (OCC) -- The OCC 2013 vendor management rule requires banks to audit, monitor and mitigate risks of third-party debt collection agencies3. Banks (State and Federal) are expected oversee and control every operation that affects a customer. For the agencies this is a significant rise in costs by way of connecting to the banks monitoring systems and reporting solutions, and increased time and effort in responding to audit queries and training staff in compliance procedures. Furthermore, debt collections agencies now fall under the CFPB regulations, either directly or indirectly because of their relationships with banks. Accordingly, these companies must be compliant with CFPB standards and guidelines and provide assurance to their bank counter-parties of such compliance. The New York Department of Financial Services (DFS) has issued its own debt collection rules. What this means for collectors - they will have to make changes to meet evolving regulatory norms and expectations. Saddled with complex and rigid applications that cannot be configured at a business level, they are likely to find themselves involved in time consuming, cumbersome and expensive IT improvements or face the consequences of lapses in compliance and governance.
  • Current debt collection systems are not very effectiveand involve several disparate applications with very little integration between them. Debt collectors do not have consolidated data portals or centralized operational control leading to data inconsistencies, loss of information, duplication of efforts and high operating costs. Collectors incur the added expense of maintaining these systems and training IT staff to manage this complex infrastructure.
  • Debt collection agencies do not segment the customers efficientlyand provide appropriate flexible payment arrangements. Even if some form of segmentation of customers is done and payment arrangements are arrived at, they are not effective because they are based on the expertise and experience of the debt collection agent and not on intelligent segmentation using vast amount of historical and current customer information. In many cases collection agencies try to close the debt by settling for lower payment or foreclosing the loan by reclaiming an asset instead of applying appropriate collection strategies.
  • Collectors currently do not have right tools at their disposalto improve delinquency rates and maintain borrowers as customers. Delinquent borrowers are, first and foremost, valued customers. It is not uncommon for customers, especially those in early-stage collections, to quickly cure following a temporary hardship or have other accounts in good standing. Without a consolidated comprehensive view of the customer's relationship with the bank, collection personnel are unable to make quick decisions or offer customers a best fit solution and clear delinquent accounts.
  • Lacking a consolidated borrower-centric approach, debt collection officers unwittingly authorize different agents to communicate with the same customer. Repeated aggressive calls by different agents leaves customers frustrated and the likelihood of having customer service rated poorly and broadcast over social media to the larger public, is quite high. And there is a distinct possibility of the customer switching loyalties in search of better customer experience.
  • Multi- product, multi-channel and multi- debt obligations are characteristics of today's debtors.They expect instant seamless, frictionless access to products and services. They are turned off by interruptive calls and frustrated by repeated contact. They prefer to talk to an agent when they are ready. Furthermore, The Fair Debt Collections Practices Act (FDCPA) prohibits the use of threatening or repeated phone calls to individual borrowers. Considering the behavior and preferences of customers and the fact that staffing cost is one of the biggest expenses for lenders there is a growing demand for self- service options.

The Bureau of Labor Statistics anticipates that between 2015 and 2016 the debt collection industry will experience a 23% rate of growth4, much faster than the average for all industries. The time is ripe for financial institutions to take a strategic look at their collections operations.They need to examine what additional changes can be made to better align collections with the achievement of the organization's overall business strategies and objectives including: increased profitability, improved customer experience and regulatory compliance. An integrated, customer-centric approach can be applied to the management of delinquencies. Improving the robustness of systems and operational controls around collections process will not only improve recovery rate but also promote fair and consistent treatment of customers. Debt collections officers must make full use of today's flexible, responsive operational and IT systems to deal with new, emerging risks in the debt market.

Sources:

1: Waterloo Region Record. 30 July 2014. Avention.

2: Monthly Complain Report, January 2016, CFPB,http://1.usa.gov/1PW7D7e

3.http://www.occ.gov/news-issuances/bulletins/2013/bulletin-2013-29.html

4: Debt Collection Statistics, debtcollectionanswers.com. debtcollectionanswers.com/Debt-Collection-Statistics.html



Colorado debt collection agency reports on hold

DENVER (AP) Colorados official debt collection agency that tracks down deadbeats who owe court-ordered child support and other debts has not reported them to credit agencies for a year.

The Denver Post reports people who owe the state more than $340 million can keep skipping payments until next year.

Colorados Central Collection Services, which is administered by the state, says collections are being delayed by a computer system upgrade.

However, people wont be off the hook entirely. The agency says it will begin reporting the debtors to collection agencies around the middle of next year.



Grand jury: Sacramento County debt collection 'dysfunctional, inefficient and costly'

In a scathing report, the Sacramento County grand jury found that the county's debt collectors have failed to recover hundreds of millions of dollars and mishandled thousands of payments they did receive.

The jury of 19 county residents criticized the Department of Revenue Recovery for lack of effective management, implementing a flawed software system and obstructing auditors. Outstanding debt owed to the county rose from $370 million in 2008 to $658 million in 2015, while collections stagnated at around $40 million per year despite the installation of an expensive computer system intended to increase revenue, according to the report issued at the end of June.

"The analysis revealed that these poor collection results were the direct outcome of management failing to focus its efforts on reducing the outstanding debt, as well as the impact of the dysfunctional Debt Management and Collection System," the report states.

The Department of Revenue Recovery has 57 employees who collect victim restitution, court-ordered fines and other fees owed to the county. They are not responsible for child support or property taxes.

County spokeswoman Chris Andis said the department is reviewing the report and will submit a point-by-point response to the findings by the Sept. 29 deadline.

Marti Overton, the jury foreperson, said the Board of Supervisors and the county need to address problems with the revenue recovery operation.

"I see it as our most significant report this year," she said. "It's a really complicated, complex issue."

In 2009, the county began using its Debt Management and Collection System (DMACS), custom-built software that was supposed to improve the debt collection process.

According to the report, the Department of Revenue Recovery collects about 6 percent of outstanding debt per year. As proposed, the DMACS project was supposed to elevate the collection rate to between 32 percent and 38 percent of outstanding debt by 2011.

The DMACS was completed years late and is ineffective, according to the jury report, requiring ongoing maintenance and input from the developer. In the last seven years, the county sank more than $12 million into the system, the report said.

At one point, the jury requested a DMACS report on the annual revenue collected and outstanding debt owed to the county.

"According to IT witness testimony, this report was not a management tool within the DMACS program," the report stated. "Moreover, County IT told the Grand Jury that this was the first and only time this report had been requested."

Controversy has surrounded DMACS since 2011, when The Sacramento Bee reported that the county awarded the DMACS contract to a software developer who had lived with a woman who was instrumental in his selection. The county did not seek other bids for the project and awarded the developer a $4.4 million contract.

Besides failing to collect hundreds of millions of dollars, the county mishandled some payments it did collect.

In at least 53,000 transactions equaling about $5 million, DRR cashiers processed payments without the debtors' account information, so the debtors never received credit for reducing the amount they owed. The payments went into an Unallocated Trust Account where they stay until debtors dispute their inaccurate account balance, the report said.

DMACS also mistakenly duplicated 12,000 debtor accounts and charged them at least $3 million since 2009 due to what witnesses described as a programming issue, the report said. The jury found that a collection issue is only corrected if a debtor or county agency brings it to the Department of Revenue Recovery's attention.

"There's no checks and balances in this system," Overton said.

Other debtors get away with paying minimal amounts and taking several years to pay off their debts with no consequences, the report said, because payment plan guidelines are inconsistently followed.

On the other end of the spectrum, jurors found that at least $1.4 million in refunds were owed to debtors who overpaid. Witnesses told the jury the department is focused on returning overpayments made after July 2015. But the jury said in its report that the approach "raises serious ethical and potential legal questions" about refunds owed to people who paid before that date.

In a 2014 DMACS review, auditors from the county's Department of Finance found potential fraud and other financial irregularities within the collections system. DRR management interfered with the auditors' investigation and no final report was ever submitted to the Board of Supervisors and no discussion was held with county executives, according to the report.

Jurors reviewed policies, procedures and documentation related to the system and an independent technical analysis of its functionality. For witness testimony, the jury interviewed 23 past and present county employees. Overton estimated the investigation spanned 11 months.

The grand jury's operations are confidential, which limited what details Overton was able to provide about the investigative process.



FTC bans debt collector from debt collection business

On June 16, the FTC announced that it obtained a court order against a debt collector and one of its officers for allegedly deceiving consumers with text messages, emails, and phone calls that falsely threatened arrest or lawsuits if they failed to make debt collection payments. In May 2015, the District Court for the Northern District of Georgia issued an ex parte Temporary Restraining Order that froze a number of Defendants assets, provided the FTC with immediate access to Defendants business premises, and granted expedited discovery to determine the existence and location of assets and documents pertinent to the allegations of the Complaint. The recently issued final order prohibits the defendants from, among other things: (i) engaging in debt collection activities; (ii) misrepresenting material facts regarding financial-related products or services; and (iii) disclosing, using, or benefiting from consumers personal information, and failing to properly destroy such information when appropriate. Finally, the final order imposes a $980,000 judgment to be used as equitable monetary relief, including, but not limited to, consumer redress.