I’ve spent more than a fair amount of time collecting debt to tell you to how it works, and how you can avoid those pesky calls that disrupt your peace of mind, not to mention invade your privacy at work. I’ve spent countless hours on the phone “convincing” defaulting customers to make a small contribution towards their piling debts, and in the bargain have faced some of the choicest language from customers. I admit, some of the tactics we use to persuade customers to pay parts of their debts can be anything short of harrasment,but done clean and ethical.
Most major credit card companies and loan issuers source their debt recovery to third party collection agencies, that charge a flat fee for their services as opposed to a commission of the debt collected. The collections process is quick and efficiently executed with thousands of customer profiles stored on record,that are fed to an automated dialer.The system dialer then pulls up the relevant profile in real time with the amount owed by that customer along with other confidential details like your SSN, work address & credit information.
The concept of ”Buckets”
Buckets are a business idiom for describing the stages of delinquency. As debt collectors, its part of our duty to deal with customers appropriately that fall into the first bucket-1 to 30 days late, second bucket-30-60 days late, or third bucket-more than 60 days. These three buckets are all examples of past due accounts that have to handled using different “WIIFMs” (whats in it for me).We give the customer reasons to pay rather than veiled threats. The higher the bucket number, the more aggressive the collection strategy.
Everyone remembers the blockbuster box office major “the Terminator”.In many aspects, a debt collection agent can be compared to that fictional figure, for the simple reason that he/she will never give up until a satisfactory intermediate contribution is made towards lowering the outstanding debt. Even first time defaulters receive collection calls, as a gentle reminder to make their payments on time in the next billing cycle.Its common practice for second bucket delinquent customers to receive embarrassing calls at work. These are the most irate customers and often threaten to sue the debt recovery agency. If the customer fails to make an online payment during the collection call,or even an assurance to pay, then the customer profile goes back into the dialer and could end calling the customer several times in a day!
How to deal with Debt collectors
A PTP, als0 known as a “promise to pay” is a phrase collectors use for an assurance received by the customer during the collection call. There are 2 ways you can temporarily get the collection calls to cease for sometime. Either make an online check payment or a PTP. The collection agent will first press hard for a check payment,even something as low as $50 is gladly accepted. If not,the agent will settle for a PTP, and takes details of the amount and time period when the “promise to pay” will be met. Debt collection agents are under of pressure to clear as many accounts in a day, as the system dialer has thousands of defaulting customers.Agents too work on targets and easily settle for an assurance to pay.
Things to remember
1.Credit card dues can easily be taken care of. The minimum monthly dues are between 3%-5% of the total amount due. This is relatively a small amount and if not paid,a call from collections is warranted.
2.Whenever you get a call from collections either give them a timely assurance of payment or even better give them your checking account number and authorize a check for even a small amount.This should stop the calls, and give you temporary relief.
As a last line of advice, id like to tell everyone reading this, to do your best to avoid getting trapped in the collections process. Not only does it have the potential to hurt your credit score,and having your profile reported to the credit bureaus, its a never ending spiral cycle that will only get worse with time.