In the News 04/21/2015

The 2015 West Virginia legislative session saw significant changes for the debt collection industry. The WV Legislature passed Senate Bill No. 542, which amended several sections of the West Virginia Consumer Credit Protection Act (WVCCPA). The bill, which was signed into law by Governor Tomblin on March 31, made concessions regarding when and how often consumers can be contacted, how collectors must be notified when a consumer has obtained attorney representation and minimized the interest rate on collections’ penalties, which will be effective on September 1.

For more information, you can read the bill in its entirety here: https://legiscan.com/WV/text/SB542/2015.

Or check out our blog this Thursday for a breakdown of the WVCCPA amendments and how they will affect collections in the Mountain State.

The Fab Five Rules to Follow For a Productive Office Meeting

You likely fall into two groups of people when it comes to office meetings. If you’re part of what we’ll call Group #1, you dread meeting day. It takes you away from your daily work, throws off your schedule and ruins the rest of your day. Group #2 people enjoy office meeting day. You love getting away from your desk for a few minutes, stretching your legs on the walk up the stairs and socializing with your coworkers.

Does any of this sound familiar?

While they may or may not be your favorite part of the work week, regularly scheduled meetings are necessary in business. A productive office functions like a well-oiled machine, with each person doing their part to add to the whole.

Team meetings are an integral part of your practice because they keep everyone on the same page, unite you in common goals, ensure that no work is going undone and increase office potential.

Businesspeople working on laptop in an office.

Here we’ve put together a list of ways to make the most out of your office meetings.

  1. Come prepared

If your office has regularly scheduled weekly, biweekly or monthly meetings, then you already know the structure. If your employer sends out an agenda ahead of time, look it over and review anything that concerns you in particular. Ask yourself these key questions: Are you having any issues this month? What solutions can you bring to the table? Showing up prepared and knowledgeable and ready to speak on your own topics and issues sends a message that you care about the success of the office.

Bring a pen and paper so you can take information away from the meeting and apply it to your daily work. Taking notes during a meeting lets your employer and your coworkers know that you take whatever they have to say seriously.

  1. Focus

Realize that your employer would not take you away from your important work if it wasn’t important. Put away your cell phone, and give the meeting leader your full attention. If you have a special reason to be looking at your phone, it’s professional to tell someone ahead of time why. Otherwise, put it away and send the message that you are present and ready to focus on what’s being presented.

  1. Speak up

Whether you’re the presenter or just attending a meeting, everyone is encouraged to speak and participate. Meetings can seem much less daunting or boring when you are an active participant. You can also use these meetings as a platform to make important announcement or voice any concerns you have.

  1. Keep distractions to a minimum

When you speak, it needs to be to the entire group, not on the side, if at all possible. Try to make your points at the right time in the meeting or make note that you will have a point at a later time. This speeds up the meeting time and allows everyone to get the most out of the meeting.

  1. Application

The most important part of any meeting is to take the information presented and apply it to your daily routine. If you do not apply new strategies and techniques, then meetings truly are a waste of time. New information is meant to improve the office’s productivity, which will benefit everyone.

In the News 04/14/2015: National Corrective Group (Continued)

In last week’s “In the News” post, we discussed the actions that are being taken by the Consumer Financial Protection Bureau (CFPB) against National Corrective Group for threatening consumers with criminal prosecution and jail time for writing bounced checks. If passed by the federal district court, the CFPB’s order will require the company to pay $50,000 in civil penalties.

If you’ve given any thought to it, you may be wondering how the CFPB decides on the penalties imposed on collectors who use abusive or deceptive practices. Why aren’t these debt collection companies shut down for tricking or bullying people out of their money?

While the actual fines are decided by federal court judges, the CFPB does suggest the amount they believe to be the appropriate penalty, and they have the power to oversee a company’s operations for as long as they see fit after the fact.

In the case of the National Corrective Group, we can postulate that shutting the company down may have been the punishment had their actions been the trained policies and procedures of the business. It is likely that the penalties requested by the CFPB are scaled to “fit the crime” because a few collectors went rogue out of a desire to make extra money.

However, Mats Jonsson, CEO of National Corrective Group, is named individually in the complaint as a defendant. Jonsson is the senior company executive in charge of the daily operations of its bad check diversion programs and continues to operate Victims Services, Inc. and American Justice Solutions, Inc.

The CFPB is still in its infancy, so investigation practices are relatively new. Still, determining how deep the corruption went remains difficult. How many people within the company were active in these deceitful practices and how many others knew about it? Were the deceptive practices parts of their trained policy? The CFPB uses these and other questions to determine the level of compliance and the appropriate sanctions.

The History of Debt Collection, Part 1

According to anthropologist David Graeber, debt has involved some sort of institution throughout history. Whether it was the Mesopotamian kingship or Canon Law, some type of established authority controlled debt and ensured that there were social consequences for not paying.

As long as there has been currency, people have been borrowing and lending it. The beginnings of debt collection history involved enforced punishments upon those who were unable to pay their debts, and debts have even been paid with life itself.

If you look at the big picture, debt collectors and agencies are relatively new entities. Before their inception, it was the sole responsibility of the creditor to collect on the debt, and the law was typically on their side. In the past, many religious organizations discouraged their followers from lending and creditors from charging interest. Creditors could take consumers to court, and if they were found guilty, the consumers could be sent to debtors’ prison until his or her family could pay their debt in full. Collateral associated with the debt was a popular form of repayment (and still is in regards to car loans or home mortgages), and personal property was a popular consolation for creditors.


debtors-prison-in-america

Debtors’ prisons were abolished by the federal government in 1833. The image above is from a debtors’ prison in Accomack County, Virginia, where it was not outlawed until 1849.


Indentured servitude was a common form of debt repayment, even in early America. Debtors worked off their debts with unpaid labor for their creditor, and their service sometimes lasted years. This coupled with the tense early history of bank-based lending led to the negative reputations of both lenders and collectors. In this series, we will explore in more depth the historical timeline that led to today’s collections environment.

In the News 04/07/2015

The Consumer Financial Protection Bureau (CFPB) recently announced that they will be taking action against a nationwide debt collection operation and it’s CEO for threatening consumers with criminal prosecution and jail time for writing bounced checks. National Corrective Group, a privately-held corporation based in California, is also charged with misleading consumers to believe that they were required to enroll in an expensive financial education program to avoid the criminal charges.

The CFPB’s proposed order is currently being reviewed by the federal district court. The order would end all illegal activity, impose a civil penalty of $50,000 and require new regulations on consumer disclosure and strong supervision of the bounced check program.

For more information, check out the following press:

http://www.lexology.com/library/detail.aspx?g=13641bb6-9b06-4422-b078-d44104647fb6

http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-bad-check-debt-collector/

Corporate Social Responsibility: Atkins & Ogle in the Community

According to an article by Entrepreneur.com, companies that encourage community involvement distinguish themselves from their competitors and reap the benefits of loyal customers and happier employees. In 2013, Cone Communications and Echo Research reported a study in which they found that 82 percent of American consumers consider corporate social responsibility when deciding which products or services they want to buy.

At Atkins & Ogle Law Offices, LC, social responsibility is part of the fabric of our company not because of our business structure, but because of the type of employees the community provides. Our employees are top notch in their skills and responsibilities, but they are also dedicated to making the Putnam County and surrounding areas a better place.

In the past, Atkins & Ogle has financially supported many sports teams and extracurricular activities in Putnam County. These donations of both time and money include buying advertisements in team programs and yearbooks, sponsoring local t-ball teams and putting together a course on the collections’ process for the Law Explorers, a high school student group run by a local judge.

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Managing attorneys Jamie Atkins and Bree Ogle are both currently serving as baseball coaches in the community, and Atkins is the sitting president of the Putnam County Bar Association, which does a lot of behind-the-scenes work for the good of the county, including fundraising for ALS research.

jamie     bree

Atkins & Ogle also provides the opportunity for Putnam County seniors interested in a career in law to complete a work-based experience at the office for a credit toward graduation. Participants gain experiences attending court hearings, listening in on important phone calls and working in an office setting. AO also hires many high school students for part-time, after school positions.

By extension, our employees better the reputation of AO by being involved in other aspects of the community, such as local churches, Putnam County 4-H, career days, planning and executing charitable 5 and 10ks and serving as coaches for wrestling and cheerleading teams. In essence, our employees leave their 9 to 5 job and give of their additional time and resources to make their communities a better place.

While the resonance of community involvement is hard to measure, the second and third degree effects of corporate social responsibility are clear. Doing quality work for our clients while never losing sight of our community responsibilities consistently result in Atkins & Ogle attracting quality employees and upholding a positive reputation in and around the state of West Virginia.

In the News 04/01/2015

Law firms put their best foot forward to attract new clients and maintain their reputations.

However, sometimes it’s hard to think like a potential client. Westfair Communications Online recently published an article directed toward businesses looking to hire a law firm for complex legal transactions. Check out their list of criteria for choosing the best firm: http://westfaironline.com/70038/column-top-7-considerations-when-choosing-a-law-firm/.

This is a great resource for firms. It’s important to know what potential clients are looking for in a firm, and with this information, you can better market your skills, experience and reputation!

According to this list, many businesses want a firm that provides a “one-stop-shop” of legal knowledge and services so they can avoid having to hire multiple lawyers for each specific need. They also value depth and continuity when communicating with firms.

Inheriting Debt: How Debt Can Affect Children, Spouses and Cosigners After a Death

Frustrated Man Worries About Economy, Unpaid Bills and Retiremen

Debt is a promise to pay back a specific amount of money in a specified manner. Unfortunately, the nature of debt means that it does not take a backseat when tragedy strikes.

Many people are unaware of how their debts may affect their loved ones, so here we have broken down who, when and why someone may inherit your debt.

Children

When a parent passes away, children are often left to wade through possessions, property sales and financial baggage.

Outstanding balances can be daunting to family members—especially if they were unaware the debts existed. Fortunately, most debts die with the individual. However, there are a few exceptions. When someone dies, the executor of their will is responsible for using their assets to pay as many debts as possible. These payments have to be made in a specific order: secured debts, unsecured debts and inheritances defined in the will.

Secured debts: A secured debt has physical collateral attached that guarantees the balance will be paid to the creditor, such as a car or home. If the deceased has not paid off their car or mortgage, these items may be repossessed.

*Note: The heirs of an estate may decide to use the estate to pay off a home mortgage and take possession of the home or take over the mortgage payments themselves. They may also choose to refinance and sell the house in order to pay off the remaining amount.

Unsecured debts: Unsecured debts do not have physical collateral attached, like credit card debt or medical bills. While family members are not legally bound to pay these debts, the executor may be required to use part (or all) of the inheritance money to pay off the remaining amounts. If the estate is not worth enough to pay off the balances, the money is divided between the creditors (if there are multiples) and the remaining balance is written off as a loss.

*Note: Federal student loans are forgiven when someone dies, but a personal student loan is considered an unsecured debt.

Inheritances: After all the debts have been settled, the remaining estate is used as inheritance as it’s defined in the will.

Spouse

Joint account holders whose income and credit history are used to get a joint loan or credit card will be held responsible for shared debts.

Creditors and guarantors

When someone becomes a cosigner or guarantor for another, they assume full financial responsibility for money owed. Cosigners are responsible for paying the full amount on a credit card, rent, etc. even when the original signer passes away.

Creditors usually have a fixed period of time to make claims against an estate. Typically between two and six months, if a claim in not made in the allotted time, it will be counted as a loss to the creditor.

*Note: Cosigners and guarantors are also responsible for the full amount of a debt of the original signer declares bankruptcy.

With this information in mind, getting your affairs in order (at any age) is very important. Debt may be farther reaching than you originally thought, so while it may be uncomfortable, talk with elderly parents about the state of their affairs and put serious consideration in before becoming a cosigner for someone—even a loved one. Being educated and prepared will help you bettered categorize and understand the responsibilities of those left behind.

In the News 03/24/2015

A furniture and electronics retailer based in Virginia will be required to pay more than $2.5 million in restitution and $10,000 in civil penalties for illegal debt collection practices according to the Consumer Financial Protection Bureau.

Freedom Stores, Inc., Freedom Acceptance Corporation and Military Credit Services, LLC has been accused of filing illegal lawsuits, making unauthorized withdraws from consumer accounts and contacting service members’ commanding officers.

Many of the consumers who were in debt with these companies had parents, significant others or third parties that authorized a one-time payment on their behalf. The withdrawals became illegal when the companies kept that payment information in their systems and took funds from those accounts without authorization or notification (sometimes years later).

Between July 2011 and December 213, Freedom Acceptance Corporation and Military Credit Services filed more than 3,500 lawsuits in Norfolk, Virginia against consumers who had not signed their financing contracts in Virginia and did not live there when the suits were filed. Nearly all of the suits filed resulted in default judgment and the companies garnishing the consumers’ wages. Many of the consumers did not even know they had been sued until their bank funds had been depleted.

The company currently has 14 store locations across the country. Freedom Stores has agreed to compensate its customers and forgive more than $2 million in loans. The company is subject to continued monitoring by the CFPB.

To learn more, check out http://www.jdnews.com/news/military/retailer-to-pay-2-5-million-for-illegal-debt-collection-1.454369?page=1.

Work Smarter, Not Harder: Lean Six Sigma

Lean-Six-Sigma-300x235

As we’ve discussed over the past few weeks, timing is everything in the debt collection industry. A great way to use time efficiently is by optimizing processes and making procedures run as smoothly as possible.

Lean Six Sigma and the Continuous Process Improvement approach are a common set of industry-proven tools that are applied throughout most organizations. Applying these tools to the practice of debt collection is invaluable.

The approach includes constantly evaluating your processes in an effort to improve them. This is done with a focus on both the big picture (how it impacts the business overall) as well as the individual team member (the whole is only as great as the sum of its parts).

The big picture starts with understanding the overall vision of where you’re trying to take your practice. This includes ensuring your organization is able to accomplish its goals with its current resources and that the process has the support, or “buy-in,” at all levels. The goal at the team member level is to consistently train and educate, which will ensure that each member’s role is being executed and fulfilled at the highest level of performance possible.

Think of the actions of debt collection as an assembly line process.  A case is received and begins to go through the collection process. Typically that process will include evaluating and inputting information into the system you use, followed by pre-litigation, litigation, execution and with any luck, payment in full followed by a recorded release of judgment.

What must be evaluated throughout the entire process is three-fold: How long did this process take? How efficiently, and to what level of quality, was it performed? What was the cost and was it as cost-efficient as is reasonable?

This is where Lean Six Sigma comes in.

You can take the name quite literally—applying this approach to any business means trimming the fat (or the unnecessary steps) from your business process. The “lean” aspect focuses on efficiency. It takes a systematic approach to identify and eliminate waste (whether measured in time, effort or money) in the overall process. This is all evaluated with an overall goal of achieving perfection in the process, which brings us to the “Six Sigma” aspect of the approach.

Six Sigma is a methodology used to manage process variations in order to eliminate waste or defects with a goal of delivering the highest possible performance. In collections, our focus is providing the client with results as quickly as possible while also maintaining an emphasis on managing and minimizing risk.  Achieving our goals will ultimately improve both customer and employee satisfaction.

Executing a Continuous Process Improvement project must focus on one piece of the process at a time. That piece may be client satisfaction, operating concerns, improvement ideas, etc. and must always be tied to the overall goals/vision of the organization. To determine opportunity for improvement, you should ask several questions.

What is the problem or improvement opportunity?

Where does the problem exist (internally or externally?)

How long has it been a problem?

What is the extent of the problem and what is the impact?

Once you have identified and analyzed the problem, put it through the Continuous Process Improvement cycle, and implemented change, you must test your results. Remember to get the employees involved in the process. Resistance to change is a normal reaction; however, involving all parties in the decision for change and having them be a part of formulating the required change will instill a sense of ownership and a stake in seeing the change(s) achieve success.

While these approaches are meant to make your businesses more efficient and result in a more profitable process, you may run into mixed emotions from your team. Some will see the glass half full, believing everything is working just fine. Others will see the glass half empty, with a “this is how we’ve only done it” mentality. But with team empowerment and an environment that fosters patience in working toward a common goal, you may end the process with a common mindset that the glass is neither half empty nor half full—you were just using the wrong sized glass.