Bank debt collection is somewhat different from other kinds of debt collection in more than one aspect. When armed with a few facts about bank debt collection, you’ll be able to choose the correct collection agency by being able to tell which one understands the unique needs of bank debt collection.
Collection agencies that concentrate on bank debt collection are well aware of the unique needs of this business. For example, instead of persistent phone calls that make the debtor nervous, they may approach the problem with a positive outlook and explain to the debtor that they are offering help.
Bank debt collection is comprised of several different types of debt, including mortgages and home equity lines, credit cards, and auto, commercial or personal loans. Rules governing debt collection are the same for all of these areas, but debt collection law regarding the money that is charged as a penalty for late payment, such as fines and higher interest rates, are determined by laws specific to each of these areas of debt collection. Make sure your collection agency has experience in the type of bank debt you require assistance with.
Specialized bank debt collection firms have innovative ways of getting the troublesome debtor on the phone. Rather than haranguing people with harassing phone calls, they are turning to unusual incentives to get the debtor on the phone.
Bank debt collection can get creative. For example, programs designed to help people dealing with financial difficulties are unique to this area of the collections industry. Such programs present the customer with a carrot rather than a stick. Instead of scaring them, they give the debtor incentive to try to make things better.
Another creative approach towards bank debt collection is the area of financial hardship programs. These are not usually offered in general debt collection, so it’s an important way that collecting bank debt differs. Financial hardship programs give the customer an incentive to call in to the collections person in order to discuss possible ways to get their credit cards or secured debt back in good shape.
If a mortgage or other secured debt is the subject of the collection effort, the collection agent can similarly work out a repayment plan that helps both the bank and the debtor. Allowing the customers to defer a few payments, extend the length of the loan or pay interest only for a while lets them keep their property, and helps the bank in two ways: by preventing full default and by garnering more interest over the long term.
Financial hardship programs help out both the institution and the borrower when it comes to bank debt collection. For this reason, any bank debt collection program should consider such methods of turning bad debt into debt recovery.