Consumer debt in the United States continues to climb into the tens of trillions of dollars, and as unemployment numbers continue to rise consumers are expected to continue to pay for essential services such as rent and utilities, companies are likely to see an exponential rise in delinquencies. All of these things together can cause financial spirals, especially for those already struggling to pay their bills.
In the midst of troubling economic downturn, it is the debt collection industry’s responsibility to remain a financial service and not create more damaging burdens. Here are four things you and your company can do to continue collecting and maintain customer relationships and loyalty even through challenging economic hardships.
Acknowledge the challenge
Communication is key. Your consumers have to know that they are seen and heard. Your mission has to help consumers navigate the challenges they’re facing.
Visitors to TrueAccord’s consumer website immediately see a banner drawing direct attention to the economic crisis. The banner links to a page with resources for those impacted (and available to those who are not impacted by COVID19) helping to answer the most frequently asked questions related to those with upcoming payments and in settlement plans.
Provide non-collection related communications
Send communications that do not imply the existence of a debt. Do not mention any account, the balance due, or a demand for payment. Instead, provide other resources that can help anyone during this pandemic, like work from home opportunities, childcare assistance programs, and local resources for those in financial distress, including area food pantries and safe shelters. By providing tools that can aid consumers in need of help, you can be a guiding force for overcoming their financial burdens.
Individuals in debt often need these resources year-round, not just in the middle of a crisis. These can include tools such as budgeting resources, debt payment calendars, or links to job boards for companies still hiring.
You may also consider sharing less direct financial resources such as educational tools that may be especially helpful to individuals seeking to improve their situation and parents hoping to address their family’s needs.
Extend payment plan lengths
One step that creditors can take that is simple but impactful and can help to alleviate financial concerns is to extend the length of consumers’ payment plans. Agreeing to longer payment plans gives consumers more time to pay, creating lower monthly payment rates, and leaving more dollars they can allocate to more immediate needs.
Machine-learning and artificial intelligence can help to guide meaningful payment plan offerings. Read more about how new technologies are shaping digital debt collection.
Another step allows consumers to defer a payment. For many consumers in settlement arrangements, deferral may provide the assistance they need while not resulting in the loss of the settlement offer. In fact, North Carolina recognized this and passed this emergency law to make sure all consumers in the state have this option for the next 30 days.
Give consumers the power to manage their debts themselves
Implementing digital collections tools into your business can empower and educate consumers. Online portals and payment systems offer thousands of consumers the ease of access that they require of other financial institutions.
Ideally, digital tools should extend beyond just payment options and should include opportunities for consumers to:
- Make adjustments to the length and amount of their payment plans
- Skip or defer a payment without losing a settlement
- Dispute all or a portion of their debt
- Apply for hardship pauses
- Enter bankruptcy information
All without needing to speak to an agent.
The best debt collection practices should prioritize consumers’ needs and enable them to control their finances. It’s critically important to provide consumers with flexibility and the ability to customize when and how they pay.
Many in debt have tight budgets, live paycheck to paycheck, and sometimes are forced to choose between basic needs and paying bills. Leading the collections industry with compassion and empathy for those in need can make a lasting impact on consumers and creditors alike.
Want to learn more about what we’re doing at TrueAccord and how we can help your consumers? Get in touch with us!