There are many industries that often get a bad rap from consumers, and debt collectors or debt collection agencies are on this list. If you look at other industries that also cause distrust and public complaint, without naming any in particular, they are usually the ones that supply an essential service that we have to pay for - and resent!
When you think of a debt collector, do you think of a heavyset person with a frown on their face, knocking insistingly at your door until you answer and cough up the money? This is no longer a truthful description – and in all fairness and reality never been – the face of debt collection, it’s more a reflection on us of the emotion it makes us feel.
What is the definition of a debt collector? You’re a debt collector if you contact a debtor to request payment of a debt - whether the debt is owed to you or another company. So if you are contacting a client to request payment of debt to you or your business, you are classed as a debt collector in this instance.
So this brings us to what debt collectors are and aren’t allowed to do, act or say.
It is unlawful for debt collectors (and remember that includes anyone in a business who is contacting a debtor to request payment) to:
• Make false or misleading representations. Everything you say or write to a debtor must be accurate.
• Harass, coerce, threaten or intimidate debtors into paying. This includes unreasonably frequent attempts to contact the debtor, their friends or family – or contacting them in a way that causes them embarrassment. Please don’t call them at unsocial times of the day or when they have expressly asked you not to.
• Expressly state or imply that you have taken steps or will take steps that you haven’t taken or do not intend on carrying out.
• State that the debtor has obligations they do not have.
• Misrepresent that you are working for the government or courts. This extends to your personal portrayal and any documents.
• Misrepresent what you are permitted to do next, as a means of pressuring the debtor to pay.
• Continue to demand payment when you know the debtor has no ability to pay the debt.
Turning these situations into a positive experience can be achieved by using human skills, empathy and communication during a debt collection process. This can work wonders in getting your debt paid quickly, and to dispel any cartoon images of grumpy debt collectors.
Putting the ‘human’ back into debt collection
• Introduce yourself and explain your role in the situation – whether you’re a business owner, staff or accounts person and what you have the remit to do in this situation.
• Help debtors to understand what is owed and how they can pay.
• Clearly state the consequences of not paying, with empathy but no heightened emotion. Take the debtor clearly through the process and what will happen at each step, allowing them to ask questions.
• Communicate your process for resolving any issues and what the debtor can do if they believe the debt is not theirs. This includes future steps where disputes may be referred to the Disputes Tribunal or Court. This is not a threat, it clearly states the facts.
• Finally, if your debtor is truly in financial hardship or suffering, be empathetic while providing workable solutions that can help both parties. This includes a repayment plan or deferred payment.
If you treat borrowers reasonably and in an ethical way, it won’t be long before debt collectors are viewed as an arm of customer services, and attitudes transform from fear and loathing to people-orientated positivity.
Every day we’re faced with urban myths about politics and celebrities, and on a less scandalous scale, myths around managing our finances. While the world of celebrities doesn’t have much impact on our daily lives, nothing is more personal to us than business cash flow.