Wednesday, March 28, 2012

The Best Opportunity For Outsourcing Bank Debt Collection

By John Carmichael

Determining the best course of action for pursuing delinquent debt can be a difficult decision. Bank debt collection in particular is tough, since there are any number of ways for debtors to avoid making payments. However, one way in which to achieve greater success in bank debt collection is to outsource the process to collection agencies at the right time of year.

The months of February through April are often quite lucrative for consumers. It is tax season, which for some, means paying in to the government but, for a larger percentage, means tax refunds are coming in. For many, the idea of paying large check-cashing sums to get the money from their refund is painful, and it is highly likely that they will opt for the direct deposit route, which is less costly.

For those with overdrawn accounts, depositing the return check is less costly, and this immediately takes care of the need for bank debt collection regarding overdraft fees. However, there are plenty of other delinquent accounts a bank can sell for pursuit.

Consumers with bad debt are always ready to end the harassment of collection calls, and bank debt collection processes can benefit from this desire. When the debtor receives his or her refund, it is likely that part of, or that entire amount, will be designated to pay off bills of some kind.

In many cases, this can go a long way toward delinquent debt, thereby ending collection calls. The easiest way for a bank to profit from a consumer being fed up with collections is to outsource their delinquent debt portfolios.

At this time of year, collection agencies report the greatest return on their efforts to collect outstanding debt. That means bank debt collection can benefit from the increased income experienced by the agencies. Debt collection firms purchase debt portfolios for pennies on the dollar, and when their recovery percentage is higher, they are willing to pay more for the debt. This helps banks to recover a larger sum that can then be invested in more lucrative business pursuits.

And with the greater success of the collection firms and banks also comes an advantage for consumers. Many times, a smaller sum is accepted as a settlement, simply because the debtor has the cash immediately available. For example, if the amount to be recovered is $1000 and the debtor can offer a payment of $900 immediately, this is more likely to be accepted as payment in full, saving the consumer money.

Working smart, not hard, is the key to success in any venture, and bank debt collection is no different. Outsourcing recovery of delinquent debt early in the year leads to profit for all parties involved.

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