Credit unions would see a smaller percentage of loans fall intosignificant delinquency if they reached out to borrowers earlier,according to a firm which offers credit unions collectionassistance.

CU Recovery and the Loan Service Center says it has researchwhich indicates that something as small as a friendly reminder to aborrower in the first few days after a payment is late can beenough to prevent the loan from becoming seriously delinquent.

“It's a way of doing collections which cuts against the traditional norm,” explainedDorothy Drake, marketing specialist for the organization.

“Instead of trying to collect on loans that are alreadydelinquent, the goal is to step in before they become delinquent,”Drake said.

Drake explained that the firm, which has claimed roughly 2,400credit union clients at different times, had decided to offer thegreater degree of collections service, which it dubbed PaymentReminder, after it became clear that many credit unions lack thestaff to do it on their own.

In addition, the service works well on helping to keep overdrawnchecking accounts from getting out of hand, Drake added.

“[The new service] started some time ago with the inception ofoverdraft share protection loans and credit union collectiondepartments accepting an added collection responsibility previouslyhandled by accounting departments,” Drake explained.

“Because of the unique regulations governing overdraft shareprotection loans, collection departments found that they did nothave the necessary systems in place, or the manpower to churnthrough the contact with members that needed to be made within thenarrow window before charge-off. Needing to make 'resource vs.return' decisions, collection departments felt that they were notgiving this debt repayment area the attention that it deserved,”Drake said.