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Scrubbing charged-off portfolios for bankrupt, deceased, and military accounts has long been the norm in collections. Implementing a scrub to identify consumers who are enrolled with debt settlement companies should be non-negotiable, too.
Like traditional scrubs, a debt settlement enrollment scrub serves as a tool in identifying information about consumers. However, instead of identifying a pool of accounts not to contact, a debt settlement scrub identifies consumers who are enrolled in debt settlement programs. Through their enrollment, consumers have signaled preemptively that they are willing, and at least reasonably able, to pay. By precisely targeting these accounts, collectors can optimize resource allocation and enhance recovery rates, leading to a more effective collections strategy.
Why should collections departments implement a debt settlement scrub? Here are 3 reasons to implement a debt settlement scrub, plus how to do it effectively.
Reaching out to consumers who have enrolled with a debt settlement company can feel like a waste of time to collectors. Typically, the consumer is unwilling to discuss their account directly because they have turned over the responsibility of negotiating to a debt settlement company and have perhaps already made a trust account deposit.
Incorporating debt settlement scrubs into the collections process boosts operational efficiency by identifying consumers who have enrolled with a debt settlement company and allowing the collector to skip the step of trying to collect directly from the consumers. Pinpointing consumers who are engaged with debt settlement programs allows collections departments to streamline their efforts and approach those accounts differently. As a result, collections teams can allocate their resources more effectively, assigning the debt settlement negotiations to a specific person or team, and incentivizing those teams differently than a traditional collector. This optimization improves the workflow and enhances the overall effectiveness of the collections strategy.
Implementing debt settlement scrubs can substantially enhance collections success rates. Early identification of these consumers creates an opportunity for a cooperative approach that often leads to better success rates, because it allows lenders to develop flexible payment plans that work in harmony with the consumer's financial situation. By implementing debt settlement scrubs, lenders get a more holistic understanding of the consumer’s financial situation and help craft solutions that work to resolve the debt in a manageable way for the consumer.
Since consumers who are enrolled with debt settlement companies typically have in excess of $20,000 in debt, representing multiple accounts, proactively identifying accounts enrolled with debt settlement companies also allows collections departments to engage early, and to get their debt prioritized.
Proactive scrubbing helps build positive consumer relationships by fostering a more respectful and understanding approach to collections. By identifying consumers already involved in debt settlement programs, lenders can avoid unnecessary and costly collection efforts. It allows for a more informed and empathetic communication with consumers regarding their financial obligations.
To start, organizations should assess their current collections workflow to identify where scrubs can be most effectively incorporated. As with the other types of scrubs, automation is key. Identifying accounts that are enrolled with debt settlement companies and moving them out of the typical workflow and into a specialized workflow is critical.
Also key is training collections staff on the importance and use of scrubs. Educating the team about the benefits and processes of scrubbing can enhance their ability to apply these tools effectively. Clear guidelines should be established to determine how information from scrubs will influence subsequent collection actions. With a well-thought-out approach, organizations can ensure that scrubs enhance their collection strategies, leading to improved compliance, efficiency, and recovery rates while maintaining a positive consumer relationship.
Tailoring collection strategies to better engage with consumers is a crucial aspect of implementing effective scrub strategies. Once scrubs identify which consumers are involved with debt settlement programs, collections teams can adjust their approach to align with these consumers' circumstances. Since consumers who are enrolled with debt settlement companies typically have multiple debts, getting a holistic view of their financial situation can help collectors create workable payment options for them.
Monitoring and adjusting collection approaches are essential components of implementing effective scrub strategies. Regular analysis of scrub results can provide valuable insights into the effectiveness of current collection strategies, highlighting areas that require refinement or adjustment. By continuously tracking key performance indicators, such as recovery rates and engagement levels, organizations can identify trends and adapt their tactics accordingly.
Feedback loops should also be established to facilitate communication between collections teams and decision-makers, enabling real-time adjustments to strategies as needed. By staying agile and responsive to changes, organizations can enhance the overall effectiveness of their collections operations. This iterative process not only improves outcomes but also fosters a culture of continuous improvement, ensuring that collection strategies evolve to meet emerging challenges and opportunities in the debt recovery landscape.