How Debt Buying Works

In the 1980s, the savings and loan crisis significantly affected the US economy.  Banks were shutting down at an alarming rate, with the Federal Deposit Insurance Corporation receiving the assets of the banks to compensate for the expenses incurred in repaying the depositors of closed banks.

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The assets they obtained were then offered to private and institutional investors willing to buy the properties of the closed banks.  The Resolution Trust Corporation then conducted auctions to allow different organizations to bid blindly – the bidders were not allowed to know, let alone evaluate, the assets beforehand.

This started the debt buying industry, leading to the establishment of many debt buying firms.

When creditors decide to sell off debts, they create portfolios that categorize these debts into fresh debts (accounts that are up to six months old), primary debts (up to 12 months old), and secondary and tertiary debts (up to 18 and 30 months old, respectively).  These sorted debts are subsequently marketed and put up for bidding among sellers.

The buyer of the debt then decides on whether to directly collect from the debtor, hire a debt collection agency, resell a fraction of the debt, or to do a combination of any of these.

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Brennan & Clark is a business collections agency, providing customized receivables support solutions to eliminate credit losses for businesses.  For more information about the firm, visit this blog.

Streamlining the Phone Collection Process

There are numerous ways to collect debt from pledgers. The primary method of reminding them to pay their dues would be invoices and letters. However, those pieces of paper don’t always do the trick. That is why the next best thing to do is to take to the telephone and talk to debtors.

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The great thing about the telephone-based collection is that one doesn’t need to travel long distances just to communicate with a client. It’s cost-efficient, time-saving, and energy-sparing. However, before engaging the other party, some techniques and maneuvers need to be employed so that the debtor won’t be intimidated and a sense of responsibility would be instilled, instead.

Before talking to the client, preparations must be made first. This means that the collector needs an attitude shift. He must also research about the debt and the history of the debtor, decide in advance if accepting an amount less than the full payment is acceptable, and determine when would be the best time to call. During the call proper, one must make sure that they are talking to the right person. Then the collector should ask for the full payment. What follows is waiting for a response. Never break the silence because the longer the silence, the greater the pressure that is exerted on the other party. One should listen to the debtor intently as well because clues on how to motivate him to pay up will be found in his speech.

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Brennan & Clark helps organizations establish a well-defined goal for their collections, evaluate their internal procedures, and implement changes that will make their collections strategy more efficient. For more on debt collection, click here.