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Recent Blog Posts
When Is it Time to Send a Debt to a Collections Agency?
The COVID-19 pandemic has affected the world in horrific ways. Many people are still experiencing financial difficulties because of the pandemic. Various types of businesses across the country were shut down for months at the height of the pandemic, leaving millions of people without a job and without income. Now, a year later, the economy is slowly starting to pick back up, but many people are still struggling financially and missing payments on debts they owe. As a lender, not receiving payments can also be financially burdensome, forcing you to take action. In many cases, a lender will send an individual’s debt to a collection agency. However, sending a debt to collections is a big decision to make that could greatly affect the borrower and have an impact on the amount you receive. How do you know if sending a debt to collections is the right call?
3 Ways Banks Can Stay Proactive to Prevent Debtor Delinquency
This past year has been difficult for many people because of the ongoing COVID-19 crisis. Across the country, people and businesses alike have had trouble making ends meet, with many comparing this situation to the Great Recession in the late 2000s. According to the American Bankers Association (ABA), consumer credit delinquencies rose at the end of 2020, despite those numbers decreasing in the prior two quarters. All 11 loan categories saw an increase in the number of delinquent accounts, with home equity and mobile home loans seeing the largest increase. Nobody likes a late-paying customer, but there are ways banks can help keep the number of your delinquent accounts to a minimum.
Be Proactive With Your Customers
The best way to deal with delinquent customers is to try to prevent them from becoming past-due. You can do this by implementing a number of practices, like email communications, notices through the mail, or phone calls. Giving your customers multiple reminders about upcoming payments may help prevent their accounts from going delinquent.
Understanding the Laws Governing Actions Taken by Debt Collection Agencies
Those who always pay off their credit card balances at the end of every month and pay all of their other debts on time may never come into contact with a debt collection agency. A debt collection agency is a separate company that many lenders and creditors use to facilitate the retrieval of unpaid debts from consumers. Most of the time, hiring a debt collection agency is used as a last resort, after a creditor has already tried and failed several times to recover the payments themselves. A debt collector can be a good choice for some lenders and finance companies, but there are federal rules and regulations that they are subject to. Before hiring a debt collection agency, you should be aware of the limitations they have.
Rules for Debt Collection Agencies
Debt collection agencies will typically try various methods to retrieve past-due debt, including calling the debtor, mailing delinquent notices to the debtor’s address, and even visiting the debtor’s residence in extreme circumstances. The Federal Trade Commission (FTC) is the governing body that oversees the practices of debt collection agencies to ensure everyone is in compliance with the Fair Debt Collection Practices Act (FDCPA). According to the FDCPA, forbidden actions by debt collection agencies include:
Can a Creditor Lift the Automatic Stay During a Bankruptcy Case?
For many people, one of the fairly attractive parts of filing for bankruptcy is the automatic stay that takes place when they file a bankruptcy petition. This automatic stay will require creditors to cease all collection activity while the bankruptcy case is ongoing. This means that you, as a creditor, can no longer contact the debtor in any way or have another agency or individual contact them on your behalf for purposes of collecting debt. The discharge of debt through bankruptcy typically results in some sort of financial loss, which can put stress on any business. If your debtor has filed for bankruptcy, there are certain cases in which you can file for a motion to lift the automatic stay with the bankruptcy court, which would allow you to continue collection practices.
How Can a Judgment Enforcement Attorney Help You?
Whether you are from a bank, a credit union, an auto lender, an equipment lender, a truck lender, or another financial institution that might be involved in bankruptcies or other debt collection activities, you might find that sometimes you need more assistance with judgment enforcement. Simply having a judge declare that money or other assets are owed to you or whoever you represent might not be enough to repossess or recover the assets from the debtor. For instance, the debtor might be ignoring your phone calls and letters or the debtor might be hiding the assets you are trying to repossess. Whatever the case may be, using the full power of the law at your disposal is a good idea to recover what the courts determine is yours. That is when you should call upon a professional judgment enforcement attorney to learn what they can do for you.
How Will Cryptocurrency Affect Debt Collection in the Future?
As someone from a credit union, bank, or other financial institution, among other organizations, who deal with debt collection activities every day, sooner or later, you will have to deal with Bitcoin and other cryptocurrencies, if you have not already and whether you want to or not. This is because, over the last several years, cryptocurrency has made tremendous strides in the following ways:
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Multibillion-dollar investors from leading companies have been investing in cryptocurrencies like Bitcoin to get ahead of the trend, increasing its value and popularity amongst investors.
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Cryptocurrency infrastructure is finally safe and easy relative to its possible “dark web” roots and other suspicions of illegitimacy.
What You Need to Know About the President’s Plans for Credit Reporting
You might not be aware of it, but one of President Biden’s campaign promises was to make credit reporting fairer and more accurate so that everyone across the country, no matter their race or socioeconomic status, can have more equal and much better opportunities to access credit cards, loans, mortgages, and other financial offerings. As a representative from an auto lender, equipment lender, truck lender, credit union, bank, or other financial institution, you might want to learn more about the possibilities that the Biden Administration is open to with regards to credit reporting reform. Here are some new ideas that you might see over the next four years. Keep them in mind during your dealings with debt collection activities, including bankruptcies.
How Can a Forensic Accountant Help With Your Debt Collection Duties?
As a financial professional, be it as a representative from a credit union, bank, auto lender, truck lender, equipment lender, or other financial institution, it is important to work with an attorney who acts as an official litigator. Together, you might think you have everything taken care of when it comes time to investigate the finances of a debtor you suspect might be committing fraud or other wrongdoing. However, with regards to any number of debt collection activities, including such complicated legal processes as bankruptcy, you could also benefit from the assistance of a forensic accountant.
Do the President’s Inaugural Executive Orders Affect Mortgage Lenders?
Joseph R. Biden, Jr. was inaugurated as the 46th President of the United States of America on January 20, 2021. With barely enough time to celebrate this major achievement, he rushed to work and signed off on several executive orders and actions on his first day in office. One such executive order included extensions on the moratorium for mortgage foreclosures and rental evictions. Here are the details on this latest executive order, particularly helpful if you are a mortgage lender or servicer attempting to collect on the homeowners’ debts.
Extensions on Mortgage Foreclosure Moratoriums and Forbearance
President Biden issued several executive orders dealing with a wide variety of topics, including climate change, student loan debt, COVID-19 relief and regulations, and immigration. Of particular interest to mortgage lenders is the moratorium extension; request for even further extensions in the future; and updates to the newest forbearance guidelines. With regards to the moratorium, the new order mandates that:
Which Earnings Can Be Garnished When Collecting Debt in Illinois?
When it comes to wage garnishment, if you are tasked with collecting debt on behalf of a bank, credit union, or finance company, seizing funds from a debtor’s paycheck through garnishment or wage deductions is often a last-resort strategy for you to use in recouping your organization’s funds. With that being said, if you are faced with the need to garnish a debtor’s paycheck or other earnings, you should know just what types of funds or income can be garnished in Illinois.
What Can Be Garnished
In general, according to Title III of the Consumer Credit Protection Act (CCPA), a person’s earnings can be garnished to collect on debts. Per the CCPA, earnings is defined as:
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