3 easy steps to get more profits from your debt settlement accounts

Do you have a defined strategy for accounts that are been debt settlement programs? If you don’t, you may leave money on the table. Debt settlement companies are here to stay and debt collection agencies need to work together with the debt settlement companies for both companies benefit and the benefit of the consumer.

As you begin to work your portfolio you will find accounts that have been working with a debt settlement company via your interaction with the consumer, a power of attorney from the debt settlement company or any direct contact with that debt settlement company. The question then becomes do you have a defined strategy that is in process to work these accounts or is that strategy being defined by your collection staff.

In many collection operations there are very smart Bill collectors who have aligned themselves with negotiation agents at the various debt settlement companies in order to collect more money each month. That’s smart bill collector is creating the strategy for your business behind your back. In addition, you may be paying large commissions on those payments. That smart bill collector is getting an email from the debt settlement company with a unsecure spreadsheet consumer information which he is using to determine accounts that match within your system. Once the Smart collector as a debt has identified the matches he negotiates with the debt settlement company for payment. All this without the knowledge of the manager in most cases.

In contrast the companies that have a defined strategy for all debt settlement accounts are likely paying a much smaller commissions to the staff in charge of those accounts and it is likely involved in a much more compliant process. The debt settlement companies are not as concerned about the security of the consumer data as the collection agents need to be. This is a strong reason for your company to have a defined strategy as opposed to hey smart collector strategy.

So the first thing you need to do to increase your profits from the debt settlement accounts is to create a defined strategy for all accounts identified as in a debt settlement program. The second step to increase your profits from this segment of your portfolio is to assign a low or no commission employee to work the accounts. The last step is to make sure you are working with as many of the aggregators as possible.

There are several companies that are aggregating debt settlement company data in order to make it easier to scrub. It is advantageous to include these aggregators in your defined strategy.

Lighthouse Consulting has been building these strategies for many years and can help you to create the most profitable debt settlement strategy available.

You can’t build the collection agency of tomorrow on the system of yesterday

Why did most of the major software providers begin to develop new software products about 5 years ago? Why are the same companies being sold or merged at an alarming pace? The answer is that they are all sitting on an infrastructure that is outdated and it is easier to start over rather than build on the strong foundation they created or excuse, they did not create.

These systems were built to present screens with specific data to workers in the collection industry, so calls, letters and paperwork could be completed. I was a debt collector when the industry switched from ledger cards to computers and it was built to bring the data from the ledger card to the screen and nothing else. Well, most of the systems since then have accomplished the same thing – Get the account details on the screen and let the agent make the decisions. And why did the industry initially convert to computers? The FDCPA and other regulations required more control over the ledger cards that can be lost, changed, destroyed and altered very easily. In fact cards were lost daily.

Enter modern day collections and new regulations. Many years later, our systems fetch the account details to our screens and allow bulk append and updates; a great advancement but not much more. With the predictive dialer, we can also make millions of phone calls to the same phone numbers, not necessarily collecting more, but surely exposing ourselves to new lawsuits. The best improvements to the industry have been through vendors who are providing more technology such as dialers, payment portals or more that simply bolts on or integrates with the basic system. Many systems require work outside the system using SQL or custom programming. Many agencies and law firms that use SQL now have an SQL database staff member in their organization, so that they can be nimble enough to make changes to their system, that the system will not allow them to do directly.

Here are questions you should be asking your software provider;

  • How do you create compliance with today’s complex regulations?
  • As an example, do you have a systemic solution for forcing agents to ask for express consent every time there is an RPC?
  • How can your system stop a human from making a mistake?
  • If there are business rules I can set up, can they be defined at the client, state and city-level?
  • Do you accurately count attempts, contacts, messages and letters, and manage contact frequency for multiple clients and jurisdictions?
  • How can I make changes to the system without expensive IT personnel?
  • What is the average dollar amount your clients are spending on custom programming annually?
  • Why do my agents need to write on paper? It is a security risk.
  • Are you encrypting sensitive data at rest, including client account numbers which may have credit card numbers?
  • Can your consumers access their account and make a payment using a smart phone, tablet, a PC or an IVR?
  • As mobile computing races ahead, are your management dashboards available on a smart phone?
  • Is e-mail and the internet a part of consumer communications?

If your software provider does not have a plan for these features, it is probably because their aging infrastructure does not support the modern data base required to create these options. Unfortunately, you cannot build new technology for today and tomorrow without committing to several years of development. If your software provider waited too long, the gap is probably too wide to clear with enhancements and “fixes”. I think you have two choices. You can run your business on a system of yesterday, or you can look for a new option.

Where is the biggest opportunity to collect money in the collection files you work daily? Hint; It’s not in the high scoring accounts

Any decent agency or law firm can collect the easy to collect accounts, the cream. The servicers that stand out are the ones that can collect the rest of the portfolio. The agencies and law firms that can collect the accounts others can’t or don’t collect. Well, you may be saying I know that, but I bet you don’t know this.

The secret is segmentation! Segmentation is “divided into segments” which is how you collect the whole portfolio. The secret in segmentation is the precise process for each segment identified and segmented. Let’s talk in smaller words, small balance, debt settlement, not suit worthy, disabled, veterans, large balance, fixed income consumers and on and on. These are the segments you must find in your portfolio and then create a strategy around that segment. Let’s look at two examples debt settlement and small balance.

Small balance accounts are easy to identify, unlike debt settlement accounts so we will look at this process first. First, we must define the segment or define what a small balance account is, let’s assume it is less than $150 in total balance. So next we need to determine a strategy that is cost-effective in which to work this segment of accounts. Depending upon the client, we may choose to only send one letter and call this segment only with an IVR application. I may limit the amount of calls, whether by the IVR or a live agent. Also, depending upon the client you may append that account with more data in order to determine a subset of accounts that may be more likely to pay. In each of these instances I have to take into account their cost to work the account versus the actual return on that work.

So let’s consider a more intricate process the identification and segmentation the Debt settlement accounts. First the accounts must be identified as being handled by a debt settlement company. Your agency or law firm must also have a clear strategy for these accounts once identified. Most agency owners are law firm managing partners have no idea that accounts are being identified and settled by collectors within their staff. A large majority of the identification of debt settlement accounts Is done when a debt settlement agent sends a list of accounts to a bill collector within an agency or law firm. In most cases this is not a clear strategy from management it is a clear strategy from a smart bill collector.

The larger companies have a debt settlement strategy and generally have a person or department that handles those accounts directly with the debt settlement agent. In these cases the strategy is clear or at least communicated to the staff. Once the accounts have been identified whether body collector method or by a company strategy, there must be a strategy around how and when those accounts are settled. Many of the larger banks have clear policies regarding any accounts identify is that so account within their placed portfolios, for example, some banks require the servicer to return the account of them as soon as it is a device as a debt settlement account. Others have clear defined percentages they will expect from debt settlement agents.

By having a clear strategy to identify segments of the portfolios you are working and creating well thought out strategies for those segments is how you collect more money than your competition. In order to set yourself apart from the company you are competing against you need to learn how to segment as many sections of your portfolio as possible and build strategies to combat the difficulties with each segment.

If you need help defying segments and building strategies contact me at Lighthouse Consulting.

Phillip W. Duff,  CEO Lighthouse Consulting 904-687-1687

Debt management partners introduces darlene hirsch as chief compliance officer

Debt Management Partners https://dmpcollections.com, (DMP) would like to introduce Darlene Hirsch as the Chief Compliance Officer. In her new role, Darlene will be responsible for developing new communications channels and strategies designed to facilitate communications between consumers, vendors and clients in a compliant and effective manner. Drawing from her past experience with the Better Business Bureau, Darlene will also be responsible for creating communication channels between the company, consumers, clients and regulators to better facilitate the complaints management process between all interested parties.