From ACA Newslink: Consumer Delinquencies Continued Rising in Fourth Quarter of 2008

The American Collector's Association (ACA) is our trade association. News continues to point to lower recovery percentages for businesses across the nation and the Southeast. It is important that we, as your agency, help you to capture every dollar as credit tightens even more and consumers become more sensitive to abusive collection tactics. The ACA just sent us the following information:

"Job losses continued taking their toll on consumer finances during the fourth quarter of 2008, as evidenced by rising delinquencies in almost every loan category. The U.S. economy lost nearly three million jobs in 2008, with nearly two million of them occurring in the fourth quarter.

The Consumer Credit Delinquency Bulletin reported the composite ratio, which tracks eight closed-end installment loan categories, rose 32 basis points to a record 3.22 percent of all accounts. The bulletin is published by the American Bankers Association.

According to the bulletin, home equity loan delinquencies rose 40 basis points to 3.03 percent of accounts, setting a new record. Home equity lines of credit delinquencies also reached a new record, rising 31 basis points to 1.46 percent. Every category saw rising delinquencies except mobile home loans. The report defines a delinquency as a late payment 30 days or more overdue.

Credit card delinquencies also increased from 4.20 percent to 4.52 percent, but still remain near the four year average of 4.47 percent. This is likely due to the ability of card holders to adjust their monthly payments, unlike other loans with fixed payments.

The composite ratio is made up of eight closed-end installment loan categories: home equity, property improvement, indirect auto, direct auto, marine, RV, mobile home and personal. All figures are seasonally adjusted based upon the number of accounts."

Economic News Affecting Collections

According to the U.S. Bureau of Labor Statistics: Nonfarm payroll employment continued to decline sharply in March (-663,000), and the unemployment rate rose from 8.1 to 8.5 percent. Payroll employment has decreased by 3.3 million over the past 5 months. In March, job losses were large and widespread across the major industry sectors. (Source: http://www.bls.gov/ces/)

The Financial Forecast Center released the following projections through October 2009 on March 9, 2009 on unemployment:

U.S. Civilian Unemployment Rate Forecast
Percent Unemployed Seasonally Adjusted.
Month Date Forecast

0 - Feb 2009 - 8.10 - 0.0
1 - Mar 2009 - 8.5 - 0.3
2 - Apr 2009 - 8.8 - 0.4
3 - May 2009 - 9.1 - 0.4
4 - Jun 2009 - 9.4 - 0.4
5 - Jul 2009 - 9.7 - 0.5
6 - Aug 2009 - 10.0 - 0.5
7 - Sep 2009 - 10.2 - 0.5
8 - Oct 2009 - 10.3 - 0.6
Updated Monday, March 09, 2009 (Source: http://forecasts.org/unemploy.htm)

These numbers and other factors will dramatically affect the recovery percentage of collection accounts nationally. Alliance continues to see a steady recovery rate to spite the economic downturn.

The one thing the we find most interesting is that consumers are responding to positive treatment and respect. There are countless reports of collection agency abuse in the news, and numerous agencies utilizing abusive tactics are believed to be experiencing a drop in recovery.

Self Defense: A Practical Approach

TUPELO BRAZILIAN JUI JITSU.COM (click here)
As you may know, a lot of blogs consist passionate posts. A person finds an issue that gets them revved up or frustrated or excited and they run back to their computer and blog about it. Well, this is one of the few times I will do that; however, I feel compelled to share with you something that I just saw.

Jeff Chambers, our Company President, is involved with MMA (Mixed Martial Arts). Now I will be the first to say that I was skeptical. How in the world can a 40 year old man get into something so dangerous and put his own health at risk? Today, I got an answer.

Alliance sponsors and teaches a lot of seminars and today Jeff and Chris Gates, of Tupelo Brazilian Jiu Jitsu, were doing a simple self-defense class for one of our clients free of charge. I watched.

I was blown away and very impressed. The class was well taught and kept very simple so the thought of getting into something complicated that I had, simply evaporated. This is a very disciplined art but seems very practical. The fundamentals can be used in everyday life and builds character, provides a more relaxed attitude, and allows one's confidence in themselves to grow in a truly healthy way.

If you have the opportunity, I suggest that you visit a local MMA class. Tupelo Brazilian Jiu Jitsu is located just off of Coley Road in Tupelo. Click on the name above to go to their website. It might come in handy some day and who knows, you might be able to shed a couple of pounds if you want to do so!

10 TIPS ON COLLECTION AGENCIES

With troubling times seemingly ahead, many people will be dealing with a collection agency, maybe for the first time in their lives. The following information is provided to you in an effort to help you understand how to better manage communications from an agency.

A few facts and suggestions for those dealing with collection agencies: First, all agencies have access to the same tools. We all utilize the same credit reporting companies to affect credit and if a debtor does not pay a debt that is valid, we may sue that account in civil court to receive a judgment. Most good agencies use professional collectors whose job is to talk to debtors to insure the valid debt is paid. Some agencies use different strategies and tactics but all are governed by the Fair Debt Collections and Practices Act which is enforced by the Federal Trade Commission and in place to prevent deceptive, abusive and unfair tactics. Now that you know a few facts, let us share with you 10 things to keep in mind should you get a call from a collection agency:

First and foremost, the best way to prevent getting a communication from a collection agency is to call your creditor immediately at the first sign of a problem. Most creditors do not want to place your account for collection. If you call them and keep them up to date on your situation honestly, most are willing to work with you. Remember, you aren’t the first person to be in this type of situation.

1. Don't panic and don't get angry, this isn't the end of the world, as you know it.
2. Call the agency and get the facts. If the debt is valid, work with them to figure out the best way to approach the problem. Be straightforward about any financial situation you may be in. Collectors are trained to help consumers with collection issues.
3. Be respectful and expect respect. You have the right to be treated with dignity but the debt still needs to be taken care of.
4. Attitude. As with most issues in life, attitude determines outcome. If the attitude of the collector is rude, simply ask to speak with their supervisor. Rude collectors have no place in most collection organizations.
5. Remember, the company that extended you credit, counts on that money just as you count on your paycheck.
6. Ask the agency what their intent is. If they are going to affect your credit, they will tell you. If you refuse to pay or fail to keep an arrangement, they may place the account with an attorney and yes, they can sue you; however, they cannot do it overnight and they can't come and take your first-born.
7. In the case of a civil suit, the court will determine whether a debt is owed. It is not the jurisdiction of a court to determine how the debt is to be paid out. If you fail to pay or work out an arrangement within a specific time frame, then your wages may be garnished. No agency can take your entire paycheck. Wage garnishment laws determine how much can be withheld.
8. If you believe you do not owe a particular bill, you have the right to dispute a debt, which should be done in writing, to validate the debt for you. You also have the right to request an itemized statement; again it should be in written form.
9. Understand that the agency has a job to do, just like you do, and that they want a resolution to the problem that is a win/win for everyone.
10. Keep your promises. If you cannot make a scheduled payment, don't wait for the agency to call you. Call and keep them posted on what is going on in your world. This might not save your credit from being affected, but it will help to create a good rapport with the collector who will work with you as much as possible.
Keep in mind that we all owe money at some point in our lives. If you communicate with your creditors and be proactive, you will find that the process can be relatively painless.


Jeff Chambers
President
Alliance Collection Service, Inc.

Ken Dulaney, Sales & Marketing Director
Alliance Collection Service, Inc.

RED FLAG RULES

The deadline for organizations to have their "Red Flag" program in place is May 1, 2009. The Red Flag Rules are designed to detect, prevent, and deal with identity theft and will be regulated by the Federal Trade Commission. The penalty for a single violation under the new Red Flag rules is $2500 per occurance at this time.

Healthcare providers got a shock when they found out they were covered by the rules. The original deadline was November 1, 2008; however, as news reached healthcare providers and the panic began to set in, the government pushed the deadline back to May 1, 2009.

If you don't have a Red Flag program in place, get one. It isn't hard to do but will take some work. You must have a written program in place and that program must be authenticated, or signed off on, by your board of directors or owner. A Red Flag Compliance Officer must be appointed also.

If you would like more information on Red Flag, I will be happy to share what I have. Just leave a note here or email me at kdulaney@alliancecollectionservice.com.

Alliance Collection Service Blog "Welcome"

This blog is meant to be a forum for discussions about any issue related to the collection industry. I encourage you to place your opinion or information here as long as it is done with a professional attitude and is respectful of others.

I hope to put as much useful information into this blog as possible but your input will make it invaluable, so check back often and let your opinion or questions be known.