Successful Debt Collectors: Born or Trained?

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Debt collectors operate in a very sensitive environment. Those that make collections calls must know how to talk to people who may be at one of the toughest points of their lives. People who are in significant debt may suffer from related social issues such as unemployment, failed marriage or foreclosure on their home or property as well as mental and emotional repercussions, including depression.

While placing and returning phone calls to consumers, debt collectors must strike a balance between being compassionate about the debtor’s financial situations while also being firm in the execution of their duties to ultimately find ways to collect the debt. Collectors often find themselves on the receiving end of anger, screaming and cursing, during which they must be patient and maintain control of their own emotions.

Because of these conditions, not everyone is cut out to be in the collections business. Collections firms must be intentional and specific when hiring by seeking out those who will make the best collectors.

A recent debate on LinkedIn discussed whether or not personality or proper training techniques were responsible for the success of a debt collector. In his article on Collection Advisor, Dean Kaplan compiled a list of debt collector job descriptions from different firms, and it was no surprise that many of the desired qualities overlapped.

  1. Perseverance/Tenacity
  2. Thick-skinned/Doesn’t take things personally
  3. Cool-headed
  4. Self-motivated/Independent
  5. Patient

Don’t misunderstand us, possessing all of the right qualities does not negate the need for comprehensive training in negotiations, salesmanship, customer service and the firm’s policies. However, without these five attributes, collectors could cause more harm than good for the firm and the consumers.

What do you think? Are successful collectors born or trained? Feel free to weigh in in our comments section.

In the News 02/03/2015

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While debt collection law differs greatly from say, criminal defense, there is one component that should be at the center of every firm’s agenda—attorney/client relationships.

Lawrence G. Almelda, a shareholder at Brinks Gilson & Lione in Chicago, outlines four approaches to enhance client service practices for the American Bar Association in the following article:

http://www.americanbar.org/publications/tyl/topics/professional-development/how-to-enhance-client-service-practices-four-tips-for-new-attorneys.html

Creating a personal and mutually beneficial attorney/client relationship has a multitude of benefits, including improving the bottom line. Almelda encourages exercising high responsiveness; making clients’ lives easier by providing a filtered-down version of legal information and summarizing when you can; following up often and—most importantly—making clients look great.

Top 5 Mistakes Debt Collectors Make

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A successful collections call takes a lot of training and practice.

There are several rules and guidelines collectors are required to follow. Following those guidelines will still not help them predict the circumstances they’ll encounter while making their collections calls. During the course of their calls they will speak to a variety of individuals, ranging from polite to the disgruntled, and hear an assortment of personal stories of challenging financial situations.

Debt collectors sometimes have a bad reputation with the general public, due in large part to unprofessional, unethical practices. The illegal tactics of debt collectors are one of the many reasons why the Fair Debt Collection Practices Act (FDCPA) is so important. Consumers filed 45,050 complaints in the first six months of 2009 to the Federal Trade Commission (up 19 percent from that same period in 2008), making it even more important that collections professionals use ethical and compassionate practices. Here we’ve listed five of the top mistakes collectors make when contacting debtors.

  1. Not disclosing identity. Collectors are required under the FDCPA to identify themselves, notify the consumer that the communication is from a debt collector, give the name and address of the original creditor, notify the consumer of their right to dispute the debt and provide a verification of the debt.
  1. Failure to cease communication upon request. If a consumer submits a written notice that they wish to receive no further contact about the alleged debt, communication efforts must be terminated immediately. Continuing to contact a consumer is considered “abusive and deceptive” under the FDCPA. Collectors should also cease contact with a consumer who is represented by an attorney.
  1. Failing to Mirandize. The FDCPA requires that debt collection calls include a mini Miranda statement, which lets the debtor know that any communication (written or verbal) is at attempt to collect a debt and any information obtained during the communication will be used for that purpose.
  1. Misrepresentation, deceit or harassment. Pretending to be law enforcement or an attorney, bullying or threatening and using profanities are all prohibited under the FDCPA. While it is not necessarily considered harassment, compassionate collections practices teach collectors to avoid a bad attitude. Losing your temper (even if the debtor yells, curses or threatens the collector), being impatient and getting caught up in a consumer’s personal stories are all ways to derail a collections call.
  1. Revealing information to a third party. Part of a collections call script should be confirmation that you are speaking to the correct person. Identify the consumer by asking for their social security number, address and phone number. Discussing a debt with someone other than a debtor’s attorney or spouse is prohibited.

At Atkins & Ogle Law Offices, LC, we thoroughly train our collectors in collection law, compassionate collection and professionalism. Experience and hard work are a hallmark to our success and make our firm the most time-tested and progressive debt collection law firm in the state of West Virginia. We are guided by our values of service, honesty, integrity and proficiency. While we work to serve our clients with compassion, we also extend those sentiments to debtors.

In the News

Consumer protection

The Consumer Financial Protection Bureau (CFPB) is a government-created agency that was created in 2011 and has since been working to regulate and enforce consumer financial protection laws. This agency has taken on major industries, such as credit card companies, mortgage, real estate settlements, debt collection and now—telecommunication.

The CFPB has recently filed an action against Sprint, which has many asking whether this bureau will now be extending its reach into other types of industries. While previously relevant industries sold “consumer financial products and service,” telecom companies simply charge consumers for services. Read more here:

http://www.jdsupra.com/legalnews/consumer-financial-protection-bureau-att-21295/

What are your thoughts? Are the parameters of this action within the intent of the Dodd-Frank Act?

Best Business Practices, Part VIII

Information Security Policy

“Security is not a product, but a process.” –Bruce Schneier

Any business or company that deals in goods, services or information should have a thorough and well-documented information security policy. This policy should fundamentally explain and detail how data is obtained, stored and protected, limit or eliminate potential legal liability and preserve and protect confidential information.

Information security can encompass a variety of topics, including data restoration in the event of a disaster or emergency, computer data, telephone procedures (such as recording for quality assurance), data organization, third party risk management, confidentiality, visitor access, media, passwords, encryption, e-mail, Internet, software, audits, access and ethics.

As Bruce Schneier said, a good security policy is a process that will grow and change as your company grows and changes. With each new client, employee or update in software, you may have to make changes, additions and corrections to your security policy. In the area of debt collection, information security is essential, because collections deals in sensitive information such as addresses, phone numbers, social security numbers, income and banking information.

Like anything significant, developing an effective security policy takes time and tends to happen in stages. Development, enactment, enforcement, monitoring and maintenance are all crucial steps in making sure your information is guarded. Depending on the type of company, developing this procedure could be as simple as enforcing policy on cell phone and social media usage or as complex as obtaining offsite backups in the event of data loss or local disaster.

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An information security policy is primarily to manage potential exposure to loss or harm. It is vital that you communicate your policy to clients and train your employees.

This concludes our series on Better Business Practices. Stop by next week for brand new content!

 

Best Business Practices, Part VI

Call Monitoring Procedure

In our best business practices series, we have discussed general business practices as the well as the more collection industry-specific area of the skip trace waterfall. If the purpose of the skip trace is to get your collectors in touch with the correct person, this week’s discussion is on how to make sure your trained collectors are continuing to communicate with consumers in a meaningful, professional and legally compliant manner. This is accomplished by call monitoring.

Call monitoring is the process by which a supervisor listens to a collector’s call with a consumer without interference, scores the call (as discussed below) and then reviews the call with the collector for potential improvement.

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Generally, the law allows you to monitor the calls made by employees for quality assurance (laws vary by state).  If you can afford it, the best method is to utilize technology that will record 100 percent of your telephone conversations so a supervisor can listen to any call at any time.

Side-by-side call monitoring is also commonly utilized by supervisors looking to give immediate feedback to their collectors. To design and implement a quality call monitoring procedure, you must have the following:

  1. A written procedure detailing the purpose, methodology and steps of your monitoring
  1. A written score sheet detailing your expectations of your collectors.

Generally, the score sheets will fall into the following categories:

  • Consumer Identification, Disclosures, Mini-Miranda statements
  • Professionalism
  • Meaningful dialogue, i.e. moving toward resolution and/or information
  • Handling of complaints or “red flags”
  • Compliance with federal and state law
  1. A schedule of monitoring, strictly kept by the supervisor
  1. And finally, a log recording the score sheets on each call.  These may be categorized by collector, by client, by month, or by any combination of the three.

A consistent and robust call monitoring program will aid your collectors in continuous training for a better bottom line, but it will also save you from unwanted violations.

Drop by next week for Better Business Practices, Part VII on continuing training policy.

 

Best Business Practices, Part IV

Skip Trace Waterfall Procedure

So far in our series on best business practices, we’ve discussed disaster recovery and vendor management plans, both of which are applicable to a variety of business models. Today’s topic, skip tracing waterfall procedure, is more specific to the debt collection industry.

The bottom line is debt collectors and lawyers cannot do their jobs without being in contact with the person in debt.  Skip tracing is the process by which collectors and investigators use software to search electronic databases and online profiles. These searches can uncover information useful in the efforts of debt collection and assists collectors in ensuring they’re contacting the right individuals.

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Skip tracing waterfalls combine the use of electronic information, automated lists created by the collector and the talents of skip tracing specialists to ensure that every available resource is expended.  A beneficial skip tracing waterfall procedure streamlines old skip tracing practices and makes the process of finding information more efficient.

The waterfall model itself is a process often used in software development and designed to emulate a waterfall in that the information flows from top to bottom through phases (or in our case, vendors).

Your skip tracing waterfall procedure should include building easy access lists of accounts as well as having a dependable and cost-efficient arsenal of vendors.  Once established, it’s paramount that you train your skip tracers to find the best vendors that do the best work for the best prices and then use these tools for optimum success.  This will allow you to find and contact debtors and help them to explore their options for satisfying the debt by making payments or settling the debt upon contact.

Vendors are ranked and utilized based on their capability, economics, past successes and accuracy of results.  Once these factors are determined and searches are underway, skip tracers have more time to work other projects, perform other forms of skip tracing procedures and seek new information for communicating with debtors.

The waterfall approach is considered a best business practice because it is a progressive and innovative way to reach people and is part of the successful formula that makes a collections business thrive.

Drop by next week for Better Business Practices, Part V on employment waterfall procedure.

 

 

Right on the Money: What should you be paying your collection attorney?

vector-vintage-money-graphic-c48924First things first – you don’t pay your collection attorney.

The person that owes you does— your customer/debtor.

Unless you are owed an extremely high dollar amount, you will want to be in a commission fee arrangement with your law firm. In other words, your law firm only makes money when it collects on your debt.

For most new attorney-client arrangements a 25 percent contingency fee is standard. So, if the law firm is able to collect $100 on   your behalf, it will keep $25 as its fee and remit $75 to you.

This arrangement could change if you operate a business where your clientele is exclusively other businesses (as opposed to individuals). Then, there is a more sophisticated system that is industry standard, known as the Commercial Law League of America rates. Under these rates the law firm usually receives a lower percentage.

Also, if you have continued to increase the amount of cases you send to the law firm, or if you feel that your contribution to the relationship enables the law firm to aid its bottom line in some way, you are certainly within your right to negotiate your fee arrangement at any time.

Typically, the only time a law firm would request funds from a client would be shortly after initial placement of a new claim. This means that the firm would evaluate the claim, send a required letter to the customer/debtor and advise you of the amount required to litigate the claim, as well as other possible accompanying fees.

These fees are for court costs, not the law firm. It should be clear between you and your law firm that these funds will be returned to you upon the first receipts from your customer/debtor.

Well, there it is, short and sweet. This should help you to understand the basic costs involved in debt collection and assist you in determining the collection route you’re going to take.

5 reasons to use a professional debt collector

Do you ever day-dream that you saved the day fighting bad guys? Performed an emergency surgery and saved a life?

Who hasn’t had a dream like that?

But the truth is, without proper training, we would probably do more harm than good.  Whenever professionals are available to us, we would be wise to hand those situations over to them and spend our time doing whatever it is we do best.

The same is true in business.  Leave the things you are not trained to do well to the professionals and spend your time doing what you do best.

At Atkins & Ogle Law Offices, our specialty is legal debt collection.

If your business extends credit for your goods or services, then you will inevitably have clients (individuals or companies) that will fail to pay you. When this happens you must then decide whether to stop doing the things that you do best and become a debt collector or send it to a professional.

Here are five reasons using a professional debt collector is better than doing your own collecting:

  1. You are paying out either way.

If you have a person in your business that spends a significant portion of their time in collection efforts, you are better off sending these matters to a professional service.  Either way you are spending money— toward commission or toward payroll expenses.  With a payroll expense, your employee spends less time doing the job you hired them to do, and they are working with limited tools and power, which leads us to reason number two.  A debt collection law firm has specific tools at their disposable as well as the legal authority to pursue your money.

  1. Professionals have more tools at their disposal.

There are two general types of professional debt collection services: law firms and collection agencies.   Although this is an over-generalization, it is fair to say that you can expect both will collect your accounts on a commission basis.  While an agency will typically charge you a lesser commission, the law firm will have more tools to get better results. Obviously, each of those factors will depend on the agency and the law firm.

  1. You may end up hiring a lawyer anyway.

While it’s true that if your unpaid accounts have an average balance of $500 or less you are better off working them in-house or sending them to an agency, balances due above certain amounts ($5,000 is common) will ultimately find you in a court, which requires representation by a lawyer.

Most states have a small claims court and a large claims court.  Your business will be permitted to represent itself without an attorney in small claims court.  But the professional collection firm will likely understand the process and system so well that the commission paid the firm will be well worth the price.  Plus, you will usually be able to remain back at your business doing whatever you do best.  Additionally, when higher amounts owed force you into the large claims court, your state will require you to be represented by a licensed attorney.  You will be well served to select an attorney not only well-versed in contract law – but in debt collection.

  1. You can give them a test drive!

Many debt collection law firms will accept claims for one or two days simply for review.  If these claims fail because of conflicts, statute of limitations, document insufficiencies or other issues, the law firms are generally good to return them to you without charge and without your customer ever knowing that the claims were there.  So, when in doubt – send it out!

  1. They’re trained for the challenges.

As an original creditor, you may or may not be subject to the same debt collection laws as an actual debt collector, such as this firm.  However, any person working on your behalf is wise to understand and take note once a customer challenges the validity of your bill.  You are best at that point to consult with trained professionals.

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As a debt collection law firm, of course we want to educate you on the reasons to choose us to handle your past due accounts.

However, debt collection law firms require certain legal documents to support your claim in court.  If a customer owes you on a past due account, you will need to prove that showing, at the very least, your original contract with that customer, a written account history showing all charges, credits, interest, fees and adjustments for the life of the account as well any other documents that you feel would help the lawyer show the court what has happened in the that particular case.

If you do not have those types of documents but are still owed on an account, then perhaps working with a collection agency is a better option for you.

Lastly, it’s not uncommon for a customer to avoid or delay payment, nor is it uncommon for customers to fall on hard times, financially. When this type of challenge occurs, only well trained individuals will know the right ways to maneuver through the extensive obstacles that such a challenge may present.

Therefore, while the thought of hiring a firm such as ours may seem like a drastic option, it will allow you to pass along your problems to a trained staff that will properly and professionally represent your interests, while you get back to the interests of turning (and receiving) a profit!

You shouldn’t have to outsmart your debt collector

According to the Urban Institute, 35 percent of adults in America are in debt.

And for those 77 million Americans, a simple Google search will tell them everything they need to know about how to evade their debts.

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The blog Prudent Money recently published a post called, “How to Outsmart a Debt Collector.”

The blogger quotes Bob Brooks, an author and veteran radio show host in the financial services industry.   One of Bob’s quotes about today’s debt collectors struck me:

Debt collectors are not government agents. They’re not lawyers, and they’re not the police. Debt collectors are tunnel-vision businesspeople driven, Terminator-like, to collect debts by whatever means possible—and yes, sometimes their tactics are less than ethical. They’ve been known to tell debtors that they owe more than they actually do, contact debtors’ employers (debts are not supposed to be discussed with third parties), and threaten that they’re going to send the police to a debtor’s home to arrest him (debt collectors have no such power).

Really?!  Who has been contacting Bob?

He goes on to give several tips about how to avoid a debt collector who is “harassing” you, although truthfully most of the talk is about what happens when a debt collector is attempting to collect against the wrong person and “educates” the reader that you should not pay that debt.

The Fair Debt Collections Practices Act (FDCPA) is a federal law that serves to not only protect consumers against unfair debt collection practices, but also places the fair debt collectors – the “good guys”- on a level playing field.  Individual states have laws that either mirror and/or enhance the FDCPA and offer even more protection to their consumers.

So, “outsmarting” the debt collector is not really the issue these days.  The laws are clear.

The clean, reputable debt collection law firm or agency will likely be licensed or bonded as local law requires, will likely record all communication with the consumer, and will likely have written policies and procedures in place for the handling of every key event anticipated in the collections process.   Law firms that anticipate, train, practice and follow these procedures on a daily basis offer an experience to the consumer that is a far cry from what Bob describes above.

And, it actually gets better results.

Our experience is that when a person owes a debt, it is more often than not because they intended to pay it and at some point became unable.  If we are considerate and professional in our communication to the consumer, they are generally understanding and forthright in return.   They will pay their debts as their circumstances allow.   Obviously this is not always the case, which is why we have legal recourse at our disposal.

Even then, however, the goal is to remain consistent in our professionalism and ethics.

Sorry to dispel the Terminator imagery, Bob.