When the economy is in a downturn, people lose their jobs and that makes it tough to pay their debts. If you are a debt collector then there are certain strategies you have to use to get people to pay. One of the key strategies is finding out the problem and then you have to respond accordingly. You have to become a problem solver. Sometimes a simple reminder will do the trick and in certain cases you have to use the art of persuasion and negotiation.
Send out reminder letters. If someone has forgotten to pay debts, you can send a reminder notice. Sometimes a statement is misplaced or the borrower never receives it. If this is the case, a large population of delinquent customers will pay, if there are no other problems, when the statement is received. There is a certain percentage of people who will never pay their debts until they have a statement in hand even if they know its past due.
Make some phone calls. In many cases you can send several letters and get no response. When that happens you have to start making phone calls. If you can actually talk with someone, you will have a better chance to get him to pay. Talking with a past-due customer gets you an opportunity to establish to find out the problems a debtor may be facing. This also gives you an opportunity to set up payment arrangements. You can also find out if the person is experiencing a short- or long-term hardship.
Explain the ramifications of not paying. If you tell debtors what will happen if they refuse to make payments, they may begin making payments. When payments are not made on time the debtor’s credit report will begin to suffer. The credit score will be lowered and this can decrease the person's chance of receiving credit in the future from other lenders. The account can also be forwarded to a collection agency for further collection activity.
Send the account to a collection agency. Some companies have in-house collection staffs. When a past due debt account reaches a certain status, they will forward it to their collection department. For those companies that have no such department, or the in-house department cannot resolve the problem, they will forward the account to a collection agency, also known as third-party debt collectors. Accounts are usually sent to collection agency when there has not been a payment on the account in approximately 180 days. When a collection agency receives the account, it will contact the debtor by mail and phone. If the agency is not able to resolve the account, it may take the debtor to court and get a judgment. When a judgment is obtained a collection agency can garnish your wages or put a freeze on your bank account.