| Bank debt collection is a totally different animal than | | | | business. This should be your first step in the process |
| other kinds of collection for a variety of reasons. If | | | | of collections, not your last, because most of these |
| you understand the basics of bank debt collection, | | | | agencies don't charge until they recover money for |
| you'll be armed with the knowledge necessary to find | | | | you. They have a better recovery record than |
| a collection agency that understands your unique | | | | in-house collections, and if they don't collect there's |
| needs. | | | | no fee, so there's no risk. |
| Bank debt collection means collections on mortgages, | | | | Bank debt collection can get creative. For example, |
| HELOCs, personal or commercial loans, auto loans, or | | | | programs designed to help people dealing with |
| credit card debt. The first few types, mortgages, | | | | financial difficulties are unique to this area of the |
| HELOCs, and auto loans, are secured debt. Personal | | | | collections industry. Such programs present the |
| and commercial loans can be either secured or | | | | customer with a carrot rather than a stick. Instead of |
| unsecured, and credit card debt is virtually always | | | | scaring them, they give the debtor incentive to try |
| unsecured, with the exception of some credit cards | | | | to make things better. |
| for people with very bad credit that require them to | | | | On the other hand, for secured debt, the techniques |
| make a deposit in the bank in the amount of the | | | | are very different. Whether you have an in-house |
| credit card limit. | | | | collection department or use a collection agency that |
| Secured debt means that the bank has a claim on | | | | specializes in bank debt collection, you'll want to |
| property tied to the loan if the consumer defaults on | | | | approach the debtor differently. Financial hardship |
| the loan. This means that they can repossess the car | | | | programs are common among secured loans like |
| or foreclose on the house to make their money | | | | mortgages and car loans. |
| back. In practice, most banks would rather get their | | | | Financial hardship programs restructure the client's |
| money than get the property, but the threat of | | | | payments in one way or another. They can defer |
| losing the property means that consumers are more | | | | payments and tack on the missing money to the |
| likely to keep their payments current on secured | | | | principal, lengthen the loan terms (from, say, 30 years |
| loans for as long as possible. | | | | for a mortgage to 40 years), or switch the |
| One fact you need to know when it comes to bank | | | | payments to interest only for a period of time. |
| debt collection is that if customers haven't paid by 60 | | | | Financial hardship programs help out both the |
| days past the due date, they're most likely not going | | | | institution and the borrower when it comes to bank |
| to pay without prompting. When you come up to | | | | debt collection. For this reason, any bank debt |
| that signpost it's time to hire a collection agency that | | | | collection program should consider such methods of |
| understands this specific area of the collection | | | | turning bad debt into debt recovery. |