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What does it take to lower delinquencies? Today’s economic climate challenges credit unions to practice early interventions and maintain a proactive attitude toward preventing growing defaults. To uphold member communication and to collect their debts, credit unions are expanding in-house call centers, letter campaigns and virtual agents. However, what happens when extended efforts still result in silence? Before moving to repossession, foreclosure, charge-off or small-claims court, many credit unions are now implementing a proven and measurable tactic called a “field call.” This approach has demonstrated itself to be a highly effective tool in lowering delinquencies and maintaining member contact. While some techniques have been effective in connecting to some unresponsive members, other members continue to consciously avoid collectors’ call and letter campaigns. Instead of increasing collectors, lenders are better off concentrating on contact performance (determined by monitoring right-party contact metrics and risk-based modeling). Field calls do not take the place of collections. Rather, they augment the collector’s efforts by reestablishing the line of communication where traditional methods of contact have failed. Field call companies will send a field professional to the actual doorstep of the borrower on behalf of the lending institution. The field representative professionally and empathetically encourages immediate contact. Not only is there an effort to get the CU collector and member in contact, depending on the field call company, other essential information can be gathered such as photos or updated demographic and contact information. This opportunity gives credit unions the vital insight they need to determine the best course of action going forward on the past-due loan. Historically, field contact or field collections have been exercised since the late 1940s. At that time, they were primarily used by unsecured lenders. Over the last two decades, a trend toward outsourcing field collections and investigations has emerged due to the potential liability exposure when sending direct employees into the field. With that in mind, the selection of a professional and security conscious field contact company is critical. Compliance is absolutely vital when selecting a field call company. These companies are a reflection of the credit unions and must maintain the utmost professionalism and protection for the institutions they represent. The potential risks to enterprises selecting substandard vendors is high and due diligence is of paramount importance. It is critical that the field call company be a licensed debt collector and certified. The credit union should perform criminal background checks on its representatives, and have an IT infrastructure that is impenetrable to attempted data breaches. Nationwide accessibility is also convenient for credit unions, so that any field call request can be completed. Credit unions need to consider which is more cost effective: spending a fraction of the cost to run a field call, spending an excess amount on skip tracing, or ultimately closing the loan in an expensive and undesirable manner. Even with all of the technological advances in today’s professional debt collection practices, a personal field visit continues to be a highly effective tool in prioritizing the loan. This leads to effective member communication and an increased number of resolved delinquent accounts.

Peter Westerman

Credit Union Times

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