Mary Shores, president of Midstate Collection Solutions Inc., shares a few reminders to help collectors when communicating with consumers about unpaid debts.
3/25/2021 9:00
March is National Credit Education Month, which is a perfect time to remind consumers of financial management resources, especially if they are being proactive about resolving their account.
“I think that the best thing for collectors is to have a baseline for the consumer’s financial experience,” said Mary Shores, president of Midstate Collection Solutions Inc. “That, to me, lies on four ideas, which can be found in the Consumer Financial Protection Bureau survey on Financial Well-Being in America.” The ideas presented are:
- How can the consumer gain control over their day-to-day and month-to-month finances?
- Financial wellness starts with identifying that financial planning behavior.
- Gauge the consumer’s ability to sustain a financial shock by asking questions such as, “How are you feeling about your finances over the next few weeks?”
- These types of questions are compliant because you’re not giving financial advice to the consumer. Collectors can allow the consumer’s answer to guide their response in helping them come up with a plan to resolve their debt.
“The first part of financial freedom truly is that concept of awareness,” Shores said. “With that being said, you have to be extremely careful any time we’re giving advice to consumers. You have to be mindful of compliance.”
ACA International members have experienced an uptick in incoming calls over the last year. This highlights the importance of providing financial management tips, when the consumer asks, in addition to helping them resolve their account with a creditor.
Use positive language with consumers who contact your collection agency or indicate they are ready to pay, Shores explained.
“Listen to be informed, listen without judgment and listen to understand,” she said. “Listen in a way that a consumer can feel heard and understood because that will help them to create positive feelings so they can feel good about paying their debt.”
Consumers who contact collection agencies about their accounts may be looking for the right strategy to pay off their debt, Shores said.
Don’t take that for granted.
“You can take a well-intentioned call and have it turn a corner and lose the payment. Even though it is tax season and our phones are busier, we still have to keep in mind that often times these consumers are deciding between many debts they have to pay,” Shores said. “The way to help them get your debt on a higher priority list is to listen.”
Shores also has a few tips for consumers.
“My personal advice is to look at your budget and prioritize debts based on what has the most consequence not to pay, such as interest and fees. You always want to take out those things first,” Shores said. “The way we look at debt is very important. Using student loans as an example, often people complain about their student loans, but I’d like to see the mindset shift back to that a student loan is an investment in that person’s future success. We can look at some debt as an investment.”
Other debt, such as paying for a television on a credit card, can be dead weight if a consumer couldn’t afford the purchase to begin with.
“To me, the more you rip debt off like a Band-Aid—in other words, paying it off as quickly as you can—that’s the best decision for the long run,” Shores said. “It may cause a sacrifice in the short term so in the long term your greater financial success can be met.”
For more tips on consumer communications, read ACA International Director of Education Kelli Krueger’s article “Talking Points” in the February issue of Collector magazine.