Adapting Collections and Recovery Strategies in a Changing World

By: Wendy Elieff, SVP, Client Service and Marketing, TriVerity & The Loan Service Center

Without question, the COVID-19 pandemic has drastically changed member behavior and affected how credit unions will operate in the future. Recent studies show that while consumers have buoyed spirits about potentially returning to work and establishing some normalcy in their lives, they are also considerably cautious when it comes to buying big-ticket items such as a car or non-essentials until they feel secure with their jobs and income.

Consumer caution will likely continue to have a major impact on the credit union collections department. TransUnion’s latest survey found that of the 59% of Americans whose income has been impacted by COVID-19, 66% say they are concerned about paying their current bills and/or loans. Of this population, 12% state they are using accommodations offered by their lenders such as forbearance. In addition, 31% of impacted consumers plan to pay just a partial amount on their next loan payment.

As the pandemic continues, members’ expectations of the credit union branch experience may be more focused on feeling safe in the current environment, as well as receiving personal understanding and support for the impacts COVID-19 has had on their lives. Successfully managing member service, financial relief programs and risk will require credit unions to take an even more proactive and human-centric approach.

Maintain Reliability, Consistency and Sense of Community for Members

Here are some strategies credit unions should consider for meeting collections and recovery needs in the changing world:

  • Assure members of onsite protections and procedures your credit union is taking for their safety in the branch.
  • Offer payment extensions or other flexible payment programs to work with members’ needs as they recover financially.
  • Study loan payment activity to determine which members may benefit from early notices.
  • Educate and train your credit union staff in expressing concern for and assisting members’ financial wellbeing. Gather facts with empathy, and try to verify member information by asking open-ended questions, such as “What is your address?” rather than “Is your address correct?”

Ensuring member information is up to date is essential to resolve delinquent account balances. The more you know your members’ files and history, the greater the likelihood of finding short- and long-term payment solutions. Frontline staff should verify members’ information and their preferred method of communication at every opportunity.

The Importance of Keeping Accurate Records

As the nation enters post-COVID operations, members may have moved geographically for job or economic reasons. Finding a member can be one of the greatest challenges in your credit union’s debt recovery efforts. Even when you’ve located the member there is no guarantee of getting paid. Maintaining accurate member information and determining their obligation to pay is essential for successful collections.

Certainly, the ideal account is one that includes a good credit bureau score, together with up-to-date contact information, but sometimes reaching the member can feel like detective work. Here are some simple steps credit unions can take to maintain current and thorough records:

  • Review member applications. Are they complete? Do they include a cell phone number and email address?
  • Look back at member collection notes to reference previous conversations. Was the member’s location verified in every contact? See what type of communication (phone, email, or mailed letter) had been the most successful in reaching the member.
  • Do the collection notes indicate the member’s commitment and ability to repay the debt? Consider their age, geographic location and depth of debt as factors.
  • Check the records to see if the member has applied for new credit at your credit union.
  • Consider gathering missing data such as phone numbers, addresses, certain DMV records etc., from public information sources and online databases. While they may have limited value, they might help fill in some blanks. Military locators can also be useful, as well as public utility records and even magazine subscriptions.

Collection industry experts are highlighting the need in these challenging times to maintain a positive consumer experience while maintaining focus on the repayment of outstanding debt. A recent article from The Financial Brand suggests that this calls for “transitioning from simply collecting a debt to enabling financial betterment.”

Wendy Elieff oversees the success of the Client Service and Marketing teams in TriVerity and The Loan Service Center, a PSCU subsidiary. Wendy has worked for TriVerity for the past 20 years. She is responsible for developing, implementing and monitoring cohesive marketing strategies to increase brand awareness. She is also responsible for building and maintaining client relationships by staying abreast of and responding to changes in the credit union marketplace.