Soft Buckets in Debt Recovery
In debt collection, businesses often hire a third party to collect this because the cost of collecting the debt themselves can be more than the debt itself. When collection is outsourced, debts are categorized according to "buckets."
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Buckets
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Forty percent of Americans spend more than they earn. Collection methods are based upon the type of debt and the debtor's past payment history. Debts are divided into "soft" and "hard" buckets. Soft bucket items include most unsecured debts. Also, the past payment history of the debtor is considered and important factor for determining in which bucket to place an account.
Payment History
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The average American owes approximately $8,500 in credit card debt. Many debt collection companies categorize their clients by past payment history. When deciding if an account is soft bucket, they examine credit history. Category 1 includes people who get occasionally behind on payments. Category 2 includes people who are often behind on monthly obligations. Category 3 includes people who are consistently behind on payments and have defaulted on some of their loans or credit cards.
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Soft Bucket Collections
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America's national debt is growing faster than any other country. Debt collection agencies use the least experienced collectors to recover outstanding payments from those in Category 1 and soft bucket debts. Soft bucket debts include credit card debt and unsecured loans. These debts and debtors are considered least difficult in terms of the ability to collect the money owed and therefore do not require the more experienced collectors.
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References
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