Case Study: Knowing When To Pull the Debt Collection Trigger

Contact information such as phone numbers and addresses are fundamental to being able to reach a debtor, but knowing when to reach out to the debtor is also a crucial factor impacting success or failure in getting payment.

As referenced in the chart below, when a consumer enters the debtor life cycle, they often avoid talking with you about the debt because they do not have the ability to pay. When the debtor begins to recover financially, you want to be sure you are among the first to reach out to them so you can be the first to be paid.

According to Don Taylor, President of Automated Collection Services, they have seen a lift of more than 12% of consumers with trigger hits entering repayment, and this on an aged portfolio that has already been actively worked by debt collection staff. Monitoring for a few key changes on the credit profiles of debtors provides the passive monitoring that is needed to tell you the optimal time to reach back to the consumer for payment. Experian compiled several recent collection studies and found that a debtor paying off an account that was previously past due provided a 710% increase in the average payment. 

Positive improvement on a consumers’ credit profile is one of those vital indicators that the consumer is beginning to recover financially and could have the will—and ability—to pay bad debts.  The collection industry is not like the big warehouse stores—quantity and value do not always work hand in hand for the debt collection industry. Targeting the high value credit events that are proven to increase collection amounts is the key to value, and Experian has the expertise, analytics and data to help you collect in the most effective manner.

Be sure to check out our other debt collection blog posts to learn how to recover debt more quickly and efficiently.

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