Getting bills paid can be a good thing, collectors say
By ALAN GOFORTH
Special to The Star
Nobody likes to get a call from a bill collector. But collectors’ associations say the process should be handled professionally and, in the end, help businesses and consumers.
Collectors also say they know their business is up because times are tough.
"What we have found is that more than 75 percent of consumer debt is caused by one of five things — illness, injury, death in the family, job loss or divorce," said Al Jones, president of the Missouri Collectors Association and vice president of sales and marketing for Shaffer & Associates in Columbia.
The combination of an economic slump, a tight job market, layoffs and loss of insurance benefits means more phones are ringing with calls from bill collectors.
"Everyone understands that the economy is in a downturn and that times are tough," Chris Coffman said. "There is more debt to be collected, but it’s harder to collect from the consumer. They may have lost their job, or they may have one income instead of two. Plus, more people are now relying on government assistance."
Coffman is president of the Kansas Collectors Association and client services consultant for Synerprise Consulting Services in Mission, which works with health-care clients. Both his and Jones’ groups are affiliates of the American Collectors Association in Minneapolis.
Business also is strong at Shaffer & Associates, which specializes in the banking industry.
"We are seeing more demand," Jones said, "but my clients, the banks we work for, are not experiencing an upturn in the amount of defaulted debt. News coverage about the economy scares people, so they are spending and borrowing less. Most banks in the Midwest are seeing an increase in past-due accounts but not in the number of defaults."
Working things out
Jones and Coffman understand that consumers are less than thrilled to receive a call from someone in their profession, and they work hard to dispel myths.
"The biggest misperception is the way the media, especially television, portray collectors," Jones said. "There are some bad apples, just as in any profession, but we are as happy as anyone to see them shut down."
Coffman agreed. "People think we are unethical, trying to pull a scam, not trustworthy or harassing them," he said. "In reality, we try to bring revenue back to the provider, to the people who are the owners."
The debt collection industry is tightly regulated, but there still can be abuse. Missouri Attorney General Chris Koster, for example, said his office got more than 2,000 calls last year about debt collectors, the most common consumer complaint in 2010.
Legitimate collection agencies, however, have protocols in place designed to prevent abuse and lead to a good outcome for their clients and consumers alike.
Hospitals and other medical businesses, for example, usually have a 120-day billing cycle. If the insurance company has paid and the patient has not made arrangements for the balance, the provider may turn the account over to a specialized collection agency such as Synerprise.
After checking to see whether the consumer is not under bankruptcy protection, the collection agency will send a written notice. The consumer has 30 days to dispute the charge.
"After the 30 days, we will contact them by phone to remind them that we sent this letter and that they owe this debt," Coffman said. "After the 30 days, if it hasn’t been challenged or paid, it’s open for collection."
Phone calls to the home are the next step. Consumers have a legal right to decline collection calls at work. Technology has automated much of the calling process and made it easier to document each step until the bill is resolved.
"The key is to document the fact that you called and got no response," he said. "With technology, we have auto dialers that document the time and date we call. It may say, for example, that I spoke with someone on March 15 at 9:45 a.m., and they agreed to pay $15 a month on the 15th of the month. We can call back the next month and remind them if they don’t pay."
Business, consumers benefit
What consumers often overlook is the benefit of collection to the local and national economies, Coffman and Jones said. Their associations represent 42 member agencies in Kansas with more than 2,500 employees and 68 Missouri agencies with 2,750 workers. There are many more unaffiliated collection agencies in both states.
Collection obviously benefits businesses, ranging from Fortune 500 companies to mom-and-pop operations.
"We were contacted by an apartment complex that had an issue with collections," Jones said. "When we loaded their accounts, they had in excess of $2 million in bad debts. I don’t know how they were able to stay in business."
A study by PricewaterhouseCoopers found that in one year, U.S. businesses charged off $152 billion in debt losses. Third-party collection agencies returned $40.4 billion to these companies and the U.S. economy, representing a 20.9 percent reduction in private-sector bad debt that year.
What may be less obvious is the benefit to consumers. The same study found the collection industry saves the average U.S. household $354 a year. This represents money consumers would have spent if businesses raised their prices to cover losses to bad debt instead of recovering revenue through a collection agency.
"The analogy I use when speaking to groups is Wal-Mart," Jones said. "They have a scary percentage of shrinkage, or goods on their shelves walking out the door without being paid for. The cost of everything they sell is bumped up proportionately so they can break even, and we all pay the price. It’s no different with a bank or any other business."
No one likes to receive an unexpected letter or phone call. However, the most important thing for consumers to understand is that most collection agencies and their clients are more than willing to work with them to find a satisfactory resolution, Coffman said.
"We do understand that a lot of people are hurting right now," he said. "I have been in their shoes and know what it’s like. We try to operate by the Golden Rule and treat people the way we would like to be treated ourselves."
Collection abuse barred
The federal Fair Debt Collection Practices Act bars the use of abusive, unfair or deceptive practices to collect debts. Some of the things it prohibits:
•Calling at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree to it.
•Calling you at work if you’ve told them not to.
•Threatening violence or harm.
•Publishing names of people who haven’t paid debts.
•Using obscene or profane language.
•Lying when trying to collect a debt.
More details are at www.ftc.gov.
GOT A COMPLAINT? •State attorneys general take consumer complaints and pursue individual cases.
Kansas:www.ksag.org or 1-800-432-2310
Missouri: ago.mo.gov or 1-800-392-8222
The above article Courtesy of:
The Kansas City Star
"Getting Bills Paid Can Be A Good Thing, Collectors Say"
Posted Fri, Oct. 28, 2011