A new white paper from the CUNA Lending Council reports that the ongoing poor economy is forcing more credit unions to focus greater attention on collection than they did previously.
“Collections has always been on the back burner,” noted Jessica Anderson, collections manager at the $400 million 121 Financial Credit Union in Jacksonville, Fla. “We know they’re making a difference, but we’ve never seen the true impact of collections’ successes or losses until we’ve reached these economic times.”
The continuing poor economy has meant that the profile of credit union members drawn into the collections process has changed as well, according to the paper. As the recession has continued, increasing numbers of members in collections have been coming from formerly affluent households and likely still have relatively high credit scores, the paper said.
These households have drawn on their assets to meet financial demands so far, but as the recession has continued and they have often remained unemployed or underemployed, the households have entered the collections process, the paper explained.
“Collections in a Post-Recession Environment” is based on information gathered from lending and collections leaders at six credit unions as well as two experts from companies that provide outsourced collections services for financial institutions, the council said.
The white paper also explores how credit unions can update procedures, use technology, engage members early in the collections process, design loan modifications and take other steps to refine collections, the council added.