Archives for October 2016

This article was originally published on the Maurice Wutscher blog and is republished here with permission. insideARM has also previously written about this decision. We are publishing Mr. Yarborough’s post to offer additional insight regarding this important case. 

The Supreme Court of the United States has decided it will review the decision of the U.S. Court of Appeals for the Eleventh Circuit in Johnson v. Midland Funding LLC.

A link to the docket is available here: Link to Docket. 

As you will recall from my previous article, Johnson was the second case decided by the Eleventh Circuit addressing time-barred proofs of claim in Chapter 13 bankruptcy. In the first case, Crawford v. LVNV Funding, LLC, the Eleventh Circuit held that a debt collector violates the FDCPA when it files a proof of claim in a bankruptcy case on a debt that it knows to be time-barred. In Johnson, the Eleventh Circuit held that there is no irreconcilable conflict between the FDCPA and the Bankruptcy Code.

In their briefs at the Writ of Certiorari stage, both sides urged the Supreme Court to grant the writ in order to resolve the circuit split created by rulings in the Fourth (Dubois v. Atlas), Seventh (Owens v. LVNV), and Eighth (Nelson v. Midland) Circuits. Those courts have held that the filing of a time-barred proof of claim does not violate the FDCPA. Donald Maurice, of Maurice Wutscher LLP, argued the cause for the successful debt buying company in the Fourth Circuit case and led a team of Maurice Wutscher attorneys in filing an amicus brief on behalf of the National Creditors Bar Association in the successful Seventh Circuit case.

An interesting wrinkle is that an earlier petition requesting review by the Supreme Court was filed from the Seventh Circuit’s decision in Owens. As of this writing, the Court has not ruled on the request.

Appeals involving time-barred proofs of claim are still pending in the First, Third, Fifth, and Sixth Circuits. Last month, Maurice presented oral argument in the Third Circuit, which has not yet issued an opinion. You can listen to the oral argument at this link: https://goo.gl/ub9qVz. It remains to be seen whether the courts might stay the remaining cases until the Supreme Court decides Johnson.

Crawford and Johnson Deny Creditors Due Process

The Crawford and Johnson rulings are far from benign. By making it unlawful for creditors holding a particular claim from participating in a Chapter 13 case, the decisions deny creditors their constitutional due process. At the same time, to correct the due process violation, the decisions result in excepting the same debts from discharge. A debtor will not receive the “fresh start” a successful Chapter 13 case would have delivered.

In most instances, the expiration of a statute of limitations does not extinguish a consumer debt nor does it deprive a state court of jurisdiction over a claim to enforce the debt.  The FDCPA does not extinguish debts or regulate the contract rights of creditors and debtors. It only regulates a debt collector’s conduct when collecting consumer debt. Creditors can continue to lawfully collect “time-barred” debts in complete compliance with the FDCPA.

Every decision since Crawford exploring the issue of proofs of claim for time-barred debts agreed that even these debts are claims within the meaning of the bankruptcy code. The Eleventh Circuit conceded the point in Johnson. In doing so, the Eleventh Circuit implicitly recognized that creditors holding these claims possess a property right; namely, the right to continue to collect the time-barred debt under state law.

A debtor’s filing of a Chapter 13 case initiates a judicial proceeding designed to curtail, even strip this fundamental property right.  Once the case is initiated, the bankruptcy code imposes an automatic stay prohibiting the creditor from taking any action to collect “a claim.” If the Chapter 13 case is successfully concluded, the court enters a discharge injunction permanently enjoining the creditor from exercising its right to enforce the claim, provided the claim received treatment in the bankruptcy case.

The impact is not limited to “debt collectors” subject to the FDCPA. Their creditor clients, who depend on debt collectors to file proofs of claim on their behalf, are also barred from participating in Chapter 13 cases within the Eleventh Circuit.

Crawford’s Absurd Result Harms Consumers

Because of these adverse impacts on a creditor’s property rights, every Chapter 13 case requires the creditor to be afforded constitutional due process – notice of the proceeding and an opportunity to be heard. Crawford and Johnson, by prohibiting the filing of a proof of claim against a debt they recognize as a valid claim, deny creditors the opportunity to be heard.

This produces an odd result because in instances where a creditor is denied due process in a bankruptcy case, the debts owed to it are not discharged.The issue arises mostly when a debtor has not scheduled or inaccurately scheduled a creditor. As a result, the creditor lacked notice of the case and did not have the opportunity to file a proof of claim before the claim bar date. In such instances, courts will except the creditor’s debt from discharge unless the debtor can demonstrate that despite his failure to properly schedule the creditor, the creditor did have actual notice of the bankruptcy filing in time to file its proof of claim.

So even when there is a defect in bankruptcy noticing, due process is still satisfied when the creditor had the opportunity to be heard. But that opportunity is exactly what Crawford and Johnson prohibit. Debt collectors cannot file a proof of claim when the debt is subject to the defense of an expired limitations period. The remedy is to prevent discharge and allow the creditor to continue to collect the debt.

This ridiculous result is simply one of many created by barring creditor participation in Chapter 13 cases. Consumers seek bankruptcy protection to stop debt collection efforts and to relieve their debt burden. Crawford harms consumers because it takes these protections away from them. The bankruptcy code encourages creditor participation. Crawford prohibits and discourages it.

The Supreme Court will now have the opportunity to end the absurdity and allow the bankruptcy code to operate as Congress intended.

On Monday, we announced the winners in our 9th annual Best Places to Work in Collections program. After a rigorous evaluation process managed by the independent firm Best Companies Group, 36 companies met the threshold to be named a “Best Place to Work in Collections” in 2016. Best Companies Group manages Best Places to Work programs in 24 states, 9 regions, and 14 industries, as well as 12 programs across Africa, Canada, and the United Kingdom.

To be judged, companies participate in a two-part survey program. First, employers provide information on workplace policies, practices, philosophy, systems and demographics. Then, employees complete a survey that measures employee experience. The combined scores (employee opinion is weighted more heavily) determine the top companies and final rankings.

Winners are divided into three categories, by size: small (15-49 employees), medium (50-149 employees), and large (150+ employees).

Click here to see all 36 winners and profiles, in ranked order.

The first-place winner in the Small Companies category is The Law Offices of Mitchell D. Bluhm & Associates from Milton, GA.

A collection law firm led by CEO & Managing Attorney
Mitchell Bluhm, the firm employs 41 people (74% female, 26% male), with exempt
employees making an average salary of $86,468. The firm bills itself as “a debt
collection law firm that focuses on the success of all parties involved in the
recovery process,” using “cutting edge compliance and quality control systems”
which “are extremely innovative and work to support both our emphasis on
patient advocacy and retention of high quality Account Specialists.”

The company is dedicated to being an Equal Opportunity
Employer. When asked about the subject, the firm says “we provide a 10% pay
premium for bi/multi-lingual speaking staff in addition to target recruitment
activities (job fairs, flyers, employee referrals) at locations that would
increase our presence” throughout the community.

The Law Offices of Mitchell D. Bluhm & Associates offers
a “generous incentive program” to employees, giving staff the opportunity to
earn monthly cash bonuses, earn prizes through regular production-based
contests, and participate in an annual $10,000 cash giveaway. The firm also
holds quarterly catered lunches for employees, in addition to hosting several
company parties throughout the year.

The company prioritizes the
health of its staff through offering discounted gym memberships to all
employees. Additionally, the firm provides company-sponsored participation in
Tough Mudder events. If you prefer to hang out around the office, The Law
Offices of Mitchell D. Bluhm & Associates have something for you too – the
firm provides a recreation room at the office filled with shuffleboard and pool
tables.

For 2017, the Best Places to Work in Collections program will become Best Call Centers to Work for

The program will celebrate excellence among call center work environments in care, collections, and outsourcing. In addition to collection firms, creditor and business process outsourcing (BPO) companies will be eligible to participate.

Best Places to Work winners use their award as an important recruiting tool. Plus, winning sends a great message to clients and potential clients about the strength of your operations. Even those who don’t come out on top have can receive extremely valuable information — candid feedback from employees, and a road map for improvement.

Winners in the 2017 program will be recognized during an awards dinner at the next insideARM First Party Summit, in May 2017. 

Click here to let us know you are interested in participating. We will make sure you are aware when registration opens (about a month from now).

Ethics set the tone for the first day of insideARM’s First Party
Summit, in Itasca, Illinois.

The keynote, given by Al Gini, professor of business
ethics at Loyola University of Chicago, looked at “Leadership and Business
Ethics.” However, it was the panel discussion afterwards that took some of
the lofty, theoretical ideas of from the keynote and discussed their practical
applications within the collections industry.

The panel for “Business Ethics in the Day-to-Day
World of Clients and Vendors in the ARM/CRM/BPO Industries” was:

• Kelly Knepper-Stephens, Stoneleigh
  Recovery Associates LLC
• Barbara M. Woodworth, CGI Financial
  Solutions Group
• Therese M. Yakel, Early Out Services,
  Inc., and General Services Bureau

The message from the panel: ethics needs to make its way
from a buzzword shopped around in RFPs and company manuals directly to a
company’s bottom line. There is an incredible cost for unethical behavior —
cost that, maybe once, was easily explained away due to high collection rates.

That paradigm is shifting, though, and regulators and
government entities are measure the debt industry’s successes and failures
against an ethical yardstick.

Unethical behavior is also fueling headlines: Kelly
Knepper-Stephens reminded the audience of the recent Wells Fargo meltdown,
highlighting specifically how policies and procedures from one of the leading
banks weren’t necessarily the practices of many within the company.

Closer to home was the case of Commercial Recovery
Systems. A complaint charged that CRS participated in deceptive acts or
practices — specifically, that employees called consumers claiming to be
attorneys or judicial employees. Consumers were told that lawsuits had
 been filed against them, offering to settle the lawsuits out of court;
or, they claimed that consumers’ wages would be garnished.

On September 21, the U.S. District Court for the Eastern
District of Texas entered a stipulated order for a permanent injunction (can’t
ever participate in debt collection activities again) and civil penalty
judgment against the vice president of Commercial Recovery Systems.

What
is clear now is that ethical behavior is not a polite story agencies can tell
about themselves, but instead must be a thoroughly-lived practice. The
consequences are both devastating and costly.

On Monday, we announced the winners in our 9th annual Best Places to Work in Collections program. After a rigorous evaluation process managed by the independent firm Best Companies Group, 36 companies met the threshold to be named a “Best Place to Work in Collections” in 2016. Best Companies Group manages Best Places to Work programs in 24 states, 9 regions, and 14 industries, as well as 12 programs across Africa, Canada, and the United Kingdom.

To be judged, companies participate in a two-part survey program. First, employers provide information on workplace policies, practices, philosophy, systems and demographics. Then, employees complete a survey that measures employee experience. The combined scores (employee opinion is weighted more heavily) determine the top companies and final rankings.

Winners are divided into three categories, by size: small (15-49 employees), medium (50-149 employees), and large (150+ employees).

Click here to see all 36 winners and profiles, in ranked order.

The first-place winner in the Medium Companies category is InvestiNet, LLC from Greenville, SC.

A creditor recovery operation led by President Brice
Smith, InvestiNet employs 57 people (51% female, 49% male) and is growing
steadily, creating 9 new positions last year. InvestiNet specializes in the “recovery
of non-performing judgments,” saying “our unmatched investigation and legal
enforcement network allows us to unlock the hidden value in debt buyers’ and
issuers’ dormant judgment inventory” leading to “superior performance and
customer service.”

InvestiNet makes an effort to reward their employees for
a job well done. The company offers every employee an annual bonus, and offers
employees semi-annual profit sharing. They also reward good work by “always”
taking time to “celebrate when company/client goals are reached or surpassed”
through games, lunch celebrations, new items for the office, or showing
gratitude in other ways.

InvestiNet encourages their employees to get involved in
the Greenville community, saying “the company encourages donating to all local
and national charities, and each time will match all employee’s donations.”

InvestiNet cites a casual and
flexible work environment as the main aspect of their office culture that
employees love. The company finds many ways to demonstrate their commitment to
a good work-life balance – one instance is that they, as a rule, close the
office at 4:00 p.m. on Fridays. You can also see this culture in the words of
one InvestiNet employee – “rarely are there days in the office with no dog!”

For 2017, the Best Places to Work in Collections program will become Best Call Centers to Work for

The program will celebrate excellence among call center work environments in care, collections, and outsourcing. In addition to collection firms, creditor and business process outsourcing (BPO) companies will be eligible to participate.

Best Places to Work winners use their award as an important recruiting tool. Plus, winning sends a great message to clients and potential clients about the strength of your operations. Even those who don’t come out on top have can receive extremely valuable information — candid feedback from employees, and a road map for improvement.

Winners in the 2017 program will be recognized during an awards dinner at the next insideARM First Party Summit, in May 2017. 

Click here to let us know you are interested in participating. We will make sure you are aware when registration opens (about a month from now).

SAN FRANCISCO, California – LiveVox Inc., a leading provider of cloud contact center solutions, announced that LiveVox CEO, Louis Summe, and Senior Operations Consultant, Jim Lynch, will join Radius Global Solutions COO, Steven Leckerman, to discuss how cloud is changing the way first party servicers establish their competitive advantages at the 2016 First Party Summit taking place this week in Itasca, Illinois.

On the panel, Dusty Whitesell, Chief Evangelist states, “The challenges faced by the first party industry become more and more acute as regulatory bodies continue to increase pressure for more oversight and limitations. The ability to address those pressures and still perform is key to remaining competitive. Cloud is helping contact centers achieve this balance by lowering the cost of leveraging innovation with plug-and-play technology. Providing greater access to technology is creating an environment where new competitive advantages are being discovered and employed.”

LiveVox is a leader in providing risk mitigation tools that simultaneously address key compliance concerns while optimizing performance efficiencies.  LiveVox’s Business Intelligence Tool and Phone Dial Attempt Supervisor (PDAS) are prime examples of how LiveVox is providing contact centers with a competitive advantage in a changing regulatory environment through innovation. To learn more, contact us at info@livevox.com

About the event:

PANEL: Using Technology and Data to Meet Regulatory and Client Demands –               Leading to Smarter Dialing and Simplified Relationship Management

DATE/TIME: Wednesday, October 19^th, 2016 at 8:30am – 9:40am CT

PANELISTS:

o    Louis Summe, Chief Executive Officer, LiveVox, Inc.

o    Steven Leckerman, COO, Radius Global Solutions, LLC

o    Jim Lynch, Senior Operations Consultant, LiveVox, Inc.

About LiveVox, Inc.

LiveVox is a leading provider of cloud contact center solutions for enterprise operations.  Through a patented PCI-certified cloud platform and redundant IP/MPLS mesh, it delivers true multi-tenant, highly scalable and burstable contact center solutions such as ACD, Dialer, IVR, centralized call recording, business analytics and compliance suite. LiveVox enables fast deployment of contact center solutions from the cloud, while offering customers full control to manage their day-to-day business requirements in a cost-efficient way. For more information, visit http://www.livevox.com.

The report of Colorado’s sunset review of
its Fair Debt Collection Practices Act have been published.

Section 24-34-104(5)(a), Colorado Revised Statutes,
directs the Department of Regulatory Agencies to:

• Conduct an analysis of the performance of each division, board, or
  agency or each function scheduled for termination; and
• Submit a report and supporting materials to the office of
  legislative legal services no later than October 15 of the year preceding
  the date established for termination.

The main question
being asked in the sunset review of Colorado’s FDCPA is: “Is there a need
for the regulation provided under Article 14 of Title 12, C.R.S.”

Per the report, the review committee is arguing that
Colorado’s FDCPA should be continued for 11 more years, until the next sunset
review in 2028. “The licensing of collection agencies provides financial
protections for clients of collection agencies.” In this case, Colorado is
defining “client” as “consumers.” 

The other recommendations are:

• Define what is expected of a individual who purchases, sells, or
  attempts to collect on purchased debt.
• Repeal the phrase “arising out of a transaction” from
  CFDCPA’s definition of “debt.”
• Clarify that the statute of limitations in CFDCPA enforcement is
  four years.
• Sunset the Collection Agency Board
• Allow consumers who have a monetary judgment against a collection
  agency, access to surety bond funds.
• The Administrator should track license disqualifications based on
  criminal history.

The full report can be downloaded here.

insideARM Perspective

This is part of a recent ongoing trend involving local review of various laws affecting the ARM industry.

• California amended its requirements for debt collectors who receive consumer claims of identity theft.
• New York released new proposed data security rules for financial services companies.
• Massachusetts regulators are considering changes to the debt collection laws on the books there.

On Monday, we announced the winners in our 9^th
annual Best Places to Work in Collections program. After a rigorous evaluation
process managed by the independent firm Best Companies Group, 36 companies met
the threshold to be named a “Best Place to Work in Collections” in 2016. Best
Companies Group manages Best Places to Work programs in 24 states, 9 regions,
and 14 industries, as well as 12 programs across Africa, Canada, and the United
Kingdom.

To be judged, companies participate in a two-part survey
program. First, employers provide information on workplace policies, practices,
philosophy, systems and demographics. Then, employees complete a survey that
measures employee experience. The combined scores (employee opinion is weighted
more heavily) determine the top companies and final rankings.

Winners are divided into three categories, by size: small
(15-49 employees), medium (50-149 employees), and large (150+ employees).

Click here to see all 36 winners and profiles, in ranked order.

The first-place
winner in the Large Companies category is Williams & Fudge, Inc.
from Rock Hill, SC.

 A collection
agency led by CEO Bob Perrin, Williams & Fudge employs 328 people (59%
female, 41% male) and is growing at a fast rate, creating 76 new positions last
year. Williams & Fudge was founded in 1986 “with the purpose of serving the
higher education community by aiding colleges and universities in the recovery
of education-related receivables.”

The company is dedicated to being an Equal Opportunity
Employer, with 66% of current employees classified as minorities. When asked
about the subject, Williams & Fudge says “we utilize inclusion and
engagement practices every day” and that their approach is “key to the
day-to-day operations and success of our organization.” Additionally, W&F
employs several members of the disabled community and takes a variety of steps to
ensure an ideal working environment, saying “it is a core mission of the owners
to help people that might be considered less fortunate.”

W&F states that their “top incentive program” is “the
ability to make great commission for our collectors.” Their tiered pay
structure allows top collectors to make more than $100,000+ per year. On average,
exempt W&F employees make $73,500 per year.

Williams & Fudge encourages their employees to get
involved in the Rock Hill community. In 2015, employees donated over 1,000
volunteer hours to organizations like the local school district, the Red Cross,
YMCA, Chamber of Commerce, and other local charities and churches.

The company also puts a priority on the health of its
employees. W&F offers treadmill workstations, standing workstations, and
exercise balls to sit on so that employees can stay active while working.
Additionally, the company offers a gym membership reimbursement program and a “Fresh
Fruit Friday” program where fruit is delivered to every employee’s desk.

Williams & Fudge cites
a family-friendly environment, flexible schedule, and great pay as benefits
they provide that their employees love. They also provide a “unique lounge that
includes ping pong, 6 large screen televisions, and arcade games” in addition
to providing activities that are fun for the whole family, community
volunteering opportunities, and an E4E Relief partnership to assist employees
when they need it.

For 2017, the Best Places to Work in Collections program will become Best Call Centers to Work for

The program will celebrate excellence among call center work environments in care, collections, and outsourcing. In addition to collection firms, creditor and business process outsourcing (BPO) companies will be eligible to participate.

Best Places to Work winners use their award as an important recruiting tool. Plus, winning sends a great message to clients and potential clients about the strength of your operations. Even those who don’t come out on top have can receive extremely valuable information — candid feedback from employees, and a road map for improvement.

Winners in the 2017 program will be recognized during an awards dinner at the next insideARM First Party Summit, in May 2017. 

Click here to let us know you are interested in participating. We will make sure you are aware when registration opens (about a month from now).

CEDAR
FALLS, Iowa – October 18, 2016 – Harley Wilson, Vice
President of Healthcare Operations for CBE Companies (CBE) will speak at InsideARM’s
2^nd Annual First Party Summit Wednesday, October 19 in Chicago.  

Wilson will join Sherry Nirenberg, Associate Director, Hospital Billing
Services at University of Arkansas for Medical Sciences (UAMS), in presenting
how to apply intent-based leadership to exceed client expectations and increase
retention.

In 2015, Wilson led his team to greater success by implementing an
intent-based leadership philosophy inspired by David Marquet’s writings. The
approach inspires employees to take ownership and greater accountability in
problem solving and actions to improve performance for clients like UAMS.

About CBE Companies

Founded in 1933, CBE
Companies is a global
provider of outsourced call center services focused on connecting people to
solutions. The company specializes in receivables management and customer care
services. This narrow focus has enabled the company to be an expert in every
aspect of the business. From a one-of-a-kind culture immersion
approach to a proven ramp process, CBE’s focused expertise saves its partners
money and enables them to focus on their core business.

CBE approaches every business relationship
as a strategic partnership. The company shares in its partners’ successes and
failures and strives to create more of the former and less of the latter. CBE
firmly believes transparency and communication are the cornerstones in the
foundation for success. The company’s approach to a strategic partnership
begins with open communication; this assures CBE partners that the team
handling their business is committed to delivering customer insights, ideas and
new ways to accomplish goals.

With more than 1,200 people in six locations
globally, CBE Companies can deliver the right solution in the right
location(s) for your ever-changing business needs. Its corporate headquarters
is located in Cedar Falls, Iowa, with two facilities in Waterloo, Iowa, and
additional facilities in Overland Park, Kansas; New Braunfels, Texas and
Manila, Philippines. The organization is consistently recognized as
a local Employer of Choice. It has also been recognized by Workplace Dynamics as
one of Iowa’s Top
Workplaces. For more information about CBE Companies,
please visit www.cbecompanies.com or call 888-386-0273.

The U.S. Court of Appeals for the D.C. Circuit will hear
oral arguments on Wednesday in the case of ACA
International, et al. v. the Federal Communications Commission (FCC) and United States of America.

ACA International will be asking the court to review the FCC’s
July
2015 Declaratory Ruling on the Telephone Consumer Protection Act (TCPA) in
order to determine whether the FCC acted reasonably in regulating the way
companies call consumers.

ACA and its joint petitioners in the case, such as Portfolio
Recovery Associates and the U.S. Chamber of Commerce, argue
that the FCC’s order “rewrote the TCPA,” “jeopardizes desirable communications
that Congress never intended to ban,” and “encourage[s] massive TCPA class actions
seeking crippling statutory damages.”

According to the Order
on Time for Oral Arguments, each side will get 20 minutes to make their
case to the court.

insideARM Perspective

This case is sure to develop more in the coming months. Be sure to keep checking back with insideARM for the latest developments on this case.

insideARM maintains a free TCPA resources page to provide the ARM community a destination for timely and topical information on the Telephone Consumer Protection Act of 1991 (“TCPA”). This page is generously supported by LexisNexis. See the page here or find it in our main navigation bar from any page on insideARM.

The cornerstone of the page is a chart of significant TCPA cases. Click on the link in the chart for the complete text of the decision. Where insideARM has already published a story on the case, we provide a link. Case information and analysis is provided by the Bedard Law Group.

Many organizations are changing their approach to bad debt
recovery and accelerating collection efforts through early intervention
practices. Here I talk about treatment strategies and timelines, customer
experience and the value prop for early intervention.

The accounts receivable landscape is ever changing. Changes have
been more dramatic in recent years led largely by new Consumer Financial
Protection Bureau (CFPB) and Telephone Consumer Protection Act (TCPA)
regulations and guidelines.  Even with these
changes, the goals of reducing delinquency and maximizing recovery have never
been more important. Critical metrics, such as charge-off percentages and days
sales outstanding (DSO), can have huge impacts on the bottom line.

Many organizations are changing their approach to bad debt
recovery. Forward-thinking accounts receivable (AR) teams are doing away with
traditional models (both internal and external) with the end goal of maximizing
performance on bad debt.  AR managers are
working in concert with collection partners on non-traditional initiatives
geared to combat current market challenges. Companies are taking a hard look at
collection timelines and evaluating the decision to accelerate collection
efforts utilizing early intervention practices. 

Accelerating the timelines for collection outreach programs usually
enhances the customer engagement experience and improves customer satisfaction
as well.  Most consumers appreciate
courtesy outreach notifications as reminders to current or slightly delinquent
payment obligations. Consumers would rather be contacted by the credit grantor
regarding an obligation versus being contacted by a third-party collections
entity. In fact, early intervention often results in resolution preventing
negative information on the customer’s credit history.

Historically, companies have established minimal internal procedures
for collection of delinquent revenue, including dunning and low intensity
outreach campaigns. Beyond initial internal efforts, it is common practice to
have periods (30 to 120 days) where no treatment activity is being conducted.
Essentially, delinquent accounts are often housed with little or no treatment
until they are forwarded to collection agencies at some point along the
timeline.

In many cases, the consumer has not paid the obligation due to oversight or
lack of understanding the past due obligation. Most customers appreciate a
concerted effort from both parties to sort out the obligation without waiting
months to be contacted regarding the debt.

We’ve all seen the graphs demonstrating recovery rates decreasing as
debt age increases. These numbers change somewhat by industry vertical and
footprint, but generally hold true. On average, the likelihood of recovering
bad debt decreases by 10% for each additional 30 days of delinquency.

So why delay your bad debt recovery processes? I developed this
Q&A over the years in response to my conversations with customers and industry
leaders. Perhaps it is useful for you …

Q. Is a comprehensive
treatment strategy for active and inactive customers necessary?

A. Yes, unless you are performing these services internally. Early
intervention has a positive effect on revenue, and utilization of control group
methodology can demonstrate true lift after expenses.

Q. What is
the best timeline to start treatment?

A. Many partners are deploying treatment on active customers 5 to
7 days beyond the delinquent date. The majority of early stage programs for
inactive customers begin 1 to 5 days after final notice date.

Q. Is
there a value proposition to an early intervention strategy?

A. Historically, most early intervention programs yield
significant lift.  This lift can be
accomplished through detailed account segmentation, utilization of credit
history to determine treatment strategy by risk segment, and development of
control group methodology to measure true net lift performance.

Q. Why spend
financial and intellectual resources to recover what is going to pay anyway?

A. Many of your customers will pay without treatment. However a
significant percentage will not pay without being contacted. Develop a program
designed to accelerate payment on good paying customers. Account segmentation can
be used to identify and increase collections from higher risk customers.
Measure lift over a subset of untreated customers to draw conclusions on the
value of accelerating the timeline.

Q. Will
the customer experience be impacted negatively?

A. No, in fact the opposite often occurs. Customers appreciate
courtesy reminders. The key is to perform the work (even if it is outsourced)
in the name of the credit grantor. Customers would much rather be contacted by
the credit grantor instead of the first contact being from a third-party
collection agency.

The market is ripe for new collection
strategies. There are many programs being performed today that demonstrate 5% to
10% recovery lift by accelerating the timeline for treatment. These early intervention initiatives also enhance positive customer engagement and increase customer satisfaction. Increased collection percentages can mean millions of additional dollars
recovered versus traditional timelines. 
Early intervention initiatives that are data driven, utilize
segmentation strategy, and are courtesy oriented, will move the needle on
recovery.