Receivable/Accounts - Information for Credit and Collection Issues

Thursday, May 4, 2017

Dealing With Tragedy



So, recently we had a new staff member contact someone over a small debt, and when told they owed a balance on a hydro account, they responded in a very calm voice “that’s okay, I’ll be dead next week, don’t worry about it”.

That’s scary.


We called the client and they sent the police around to the person’s home for a safety check, and the person was fine, and hopefully is getting the help they need.
  We obviously also stopped calling the file for collection – no collection file is worth driving someone to take their own life.  Our client agreed with us.

It occurred to me that we should speak up about varying degrees of tragedy and how collectors can handle these circumstances as they arise, while still representing a creditor in an ethical manner.
  Often we talk about how to collect on an account, but sometimes we need to not collect.


Loss of Employment

This is fairly common, and is a reason files move to collections – no funds coming in to the household or company means no funds going out.
  You need to collect the account, but at the same time you need to work with hardship circumstances to make sure the best resolution can be made on both sides.  Payment arrangements can be made until the person gets back on their feet, or a good faith payment made shows that the consumer has intent, and you can put the file off for 30 days to give the person a chance to refinance their mortgage, acquire employment, or just get back on their feet.

Obviously if a person isn’t going to pay because of lack of income, consequences need to be brought to bear – sending the file to a collection agency, reporting to the credit bureau, etc.  However, it doesn’t require malice or constant calling, where you are ‘beating a dead horse’, so to speak.   Certainly advise the consumer you are taking action, but do so with some empathy, and then follow up in 90 days to see if their circumstances have changed.


Natural Disasters

If you are representing a national client, some time and some where homes are going to be flooded, wild fires are going to take out towns, and tornadoes are going to displace people from their community.  If you are aware of an area affected, put a moratorium or hold on collections in that area for at least two weeks, maybe more – and certainly don’t escalate because people aren’t returning your calls – it’s entirely possible their phone is submerged under water or buried under rubble.  If you are a third party, tell your client that there is a hold on a segment of their files, and when you plan to resume collections.

This is a topic I have written it’s own article on, and you can find it here.


Admittance to the Hospital

If someone is in a ward at the hospital, they can’t take your calls or resolve their debts.  If you can find out if they have a power of attorney handling their affairs while they are incapacitated, that’s a good start, but otherwise, you will just have to try to reach them when they get out.  Some provinces or states allow the statute of limitations for legal action to be suspended if someone is incapacitated medically, so keep that in mind.

If a person is fighting for their health, bills sometimes slip by the wayside, or it compounds a lack of employment issue as above – have some empathy, understand the severity of their illness or injuries, and if you have the leeway, just wait until they are discharged.


Terminal Illness

So, like the scenario above, you may end up with someone who you cannot speak with and a power of attorney may be needed to act on their behalf.  Sometimes, however, when presented with a debt, you may hear “I have stage 3 cancer and I only have two months to live, I don’t really care”.  You can’t hammer away at these people on the phone, they are not going to pay.

Due diligence may involve placing a lien on a property or setting up a civil claim to ensure the estate will pay out a creditor in the event of death, and if needed that’s a legitimate path to take, but a collector should understand when someone is facing a terminal illness, they are not going to care about their credit rating, and they certainly aren’t going to respond to aggressive calls.  Once again, empathy is the watchword and if consequences must be followed through on, do so gently and with forwarning.


Death

Unless there is a personal guarantee, the survivors of a consumer who has passed away do not owe your debt, and you cannot escalate the claim with them.  Understand that asking for a death certificate or pressing for a power of attorney to deal with you during a period of mourning is callous and unnecessary.  If the person has passed away recently, give them 2-3 weeks space to grieve and understand what needs to be resolved from the estate – and when you follow up, do so with the understanding they are working together with you, and have a great number of bureaucratic hurdles to pass through and it’s not as simple as just ‘cutting a cheque’.


Threats of Suicide or Self Harm

At the beginning of this article, we described a case where a consumer threatened self-harm.  That’s serious.  Some of our staff asked ‘why don’t we call the police directly?’.  That’s a fair question, but imagine this:

“Hello officer, my name is Bob from ABC Collections, and when told about a debt, John Smith advised he would be committing suicide, can you please investigate this?”.

Odds are, you may not be taken seriously enough, and it’s important to get the creditor up to speed on this situation immediately.  Have them call the police, as well as reach out to the consumer (who may not think of them as a confrontational or hostile party) with some self-help telephone numbers and a supportive tone.

And of course, stop trying to collect on the file.  You don’t want to be responsible for someone’s death, even indirectly.


Conclusion

I imagine creditors and collection agencies may want to handle things differently than I describe, but this is how I would like to see our team deal with horrible circumstances when possible – if you have ideas or thoughts on how to address tragedy, feel free to leave a comment or reach out to me directly, as I’d be happy to hear from you.

Thanks kindly,

Blair DeMarco-Wettlaufer
KINGSTON Data & Credit
Cambridge, Ontario
226-946-1730
bwettlaufer@kingstondc.com