Limited Information = Limited Returns

Person dumping money into a toilet bowl --- Image by © Rubberball/CorbisInaccurate or inadequate information costs creditors and collection agencies thousands of dollars at the local level.  Thousands of dollars are being lost because creditors lose contact with their customer, or because they do not have accurate or adequate information.  They need to locate them in order to contact them and collect money that is owed.

When it comes to tracking consumers, the more information available the better.  That’s why collecting a phone number, address, date of birth, zip code, employment information, and social security number are important when working with consumers.  Each of these pieces of information is a valuable part of the puzzle.

Once the creditor identifies the consumer who is not complying with the terms of their agreement, they send the account to collections in order to better their chances of collection and minimize their losses. For the collection industry, EVERY piece of information is important.  The totality of information can help build a demographic profile.

A person’s address and zip code are crucial in finding where this person lives so a bill can be sent.  Address and zip code also play a factor in determining a consumer’s ability to pay.  Based on demographics, a consumer living in Beverley Hills is probably more likely to pay than someone living in a less upscale or working class neighborhood.

If the mail is being returned because the person no longer lives there or there have been no responses, it is time to contact the consumer by phone.  Calling the right phone number is important in order to make right party contact and communicate the urgency of payment.

Employment is also important.  An employed person has income, and at their place of work there should be a phone by which they can be contacted.  If the original phone number is disconnected or not the right number, a work phone is the next best option.

Like our fingerprints, a social security number is one thing that individualizes us as a person.  It can be used to find a credit report, which hopefully has updated contact information.  That is a last resort, though, and consumer information should be gathered before an account reaches collections.

Why isn’t all information always provided?  There’s a variety of ways information can be left out.  Creditors might not require their customers to fill out certain information, leaving themselves vulnerable.  Human error can occur when clerical staff of a creditor or collection agency is working too fast or simply not paying attention when inputting data.  A consumer could intentionally mislead in an attempt to defraud.  Handwriting can be sloppy and illegible, so a clerical staff member may just make their best guess on what a letter or number is.

This can be mitigated.  Interactive online forms are a solution.  For example, a patient fills out a form before they even enter the office for their appointment.  The information is legible and the patient is no longer filling out forms while waiting.  Customer service is improved because the process as a whole speeds up.  The patient and the medical provider both benefit.

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If you need assistance in updating and gathering accurate customer information, Credit Consulting Services (CCS) can help with customer intake forms.  These forms make it easier for the consumer while also gathering necessary and accurate information.  CCS can create many different forms, including credit application and patient registration.  For more information on improving your intake forms contact CCS at 800-679-6888.

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Collection Disputes: Good Faith or Bad Faith?

Less than 5% of disputes are valid.  Disputing debt to a collection agency is a lot like pleading not guilty to a murder trial when the victim has come back from the grave as a witness.  Both are a waste of time and resources for all parties involved.

What is a dispute?  Under the Fair Debt Collection Practices Act (FDCPA), a consumer has the right to dispute the validity of their debt due.  A dispute can be verbal or written.  A written dispute is the more common of the two because it is a non-confrontational form of dispute.

Grinch 1The internet is a beautiful thing.  The amount of information one can find online is astounding.  On the flip side, that information can be misleading, especially when it comes to disputing debts.  For instance, consumers often find that a collection agency needs to validate the debt.  This is true only within the 30 day window after the consumer has received the first demand letter from the collection agency.

The consumers do their own research knowing that they do, in fact, owe the debt.  They find that they can write a letter to the collection agency hoping the debt will be dismissed and the account will vanish into thin air.  A reputable collection agency will not just dismiss the debt, but do their due diligence and make sure that the debt is in fact in need of repayment.  At Credit Consulting Services, we pride ourselves in reviewing documents thoroughly.

Invalid disputes are a hassle not only for a collection agency, but also for the consumer.  The consumer knows they owe the debt.  They try to dispute it in an attempt to get it removed from their credit even though disputes can negatively impact credit.  The consumer goes through the trouble of composing a letter themselves, or more likely they find some general form letter to use while surfing the web.  That letter can then be sent as “registered mail” which costs the consumer about $6.  That money could’ve been used to repay part of the debt!

Disputing debt does nothing to improve a consumer’s credit score.  Also, bad debt affects the economy as a whole.  When a consumer does not alleviate their debt with a creditor, the creditor has to raise prices in order to pick up the slack the consumer created through their debt.  So this individual’s debt hurts other consumers as well.  Disputing not only affects an individual, but it has a domino effect and hinders other consumers.

ConfusedWe live in the 21st century, and if a debt is truly not valid wouldn’t you pick up the phone and call the agency or creditor to try and get things figured out?  A true dispute happens immediately after the first bill is received by the responsible consumer who pays their bills on time.  Invalid disputes can occur months or even years after the bill is received.  Consumers with wrong intentions do not dispute the debt until it affects their ability to borrow money.  It is quite simple, the debt is either owed or it isn’t.

At the end of the day, if you have a legitimate dispute, respond within 30 days of receiving a statement from the creditor or the first demand letter from the collection agency. Do not dispute the bill simply because you did not pay and want it removed from your credit report to get a better credit rating, which falsely misleads the lender into believing you pay your bills on time.

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