All posts by collectionind723

VA Partially Suspends Debt Collections on Veterans Through End of Year

In this June 21, 2013, file photo, the seal affixed to the front of the Department of Veterans Affairs building in Washington. (AP Photo/Charles Dharapak)

The Department of Veterans Affairs has announced the partial suspension of debt collections against veterans through the end of the year to provide financial relief during the COVID-19 pandemic.

In a July 9 news release, the VA said it was suspending all actions against veterans to the end of 2020 where responsibility for the collection of money owed has passed from the VA to the Treasury Department.

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Under current rules, the Treasury Department has jurisdiction over VA debt collection after the debt has been delinquent for more than 120 days.

In a statement, VA Secretary Robert Wilkie said, “Veterans and their families should be focused on their health and safety during the pandemic. VA is taking action to give those with pending debts greater flexibility during these challenging times.”

In an April 2 news conference on the administration’s response to COVID-19, President Donald Trump directed the VA to suspend the collection of debts, which are often the result of the VA’s own mistakes in making overpayments on disability ratings or health care co-pays.

“We take very good care of our veterans,” Trump said. “At my direction, Secretary Wilkie will use any authority at his disposal to extend deadlines for benefits and suspend debt collections.”

According to the office of Rep. Chris Pappas, D-New Hampshire, debt collections by the VA totaled about $1.6 billion in fiscal 2019.

Pappas, chairman of the House Veterans Affairs Subcommittee on Oversight and Investigations, has introduced legislation that would suspend debt collections by the VA, as well as by the Treasury Department.

“I am glad the VA is finally taking steps to provide some much needed relief,” he said in a July 10 statement. “Too many veterans face unexpected debt collection from VA, some due to overpayments that were through no fault of their own.”

For questions on debt suspensions involving benefits, the VA advised that veterans should contact the VA Debt Management Center at 1-800-827-0648.

For health care debts, the VA said that veterans should contact the Health Resource Center at 1-866-400-1238 or make payments here.

By Article Richard Sisk

Debt Collection – Leveraging Advanced Ai/ML tools

by Karolina Grabowska

Originally Posted On:

Artificial Intelligence can make Consumer and Commercial debt collection more efficient, maximize ROI and improve customer experiences.

The debt-collections industry is not particularly immune to the all-pervasive disruptions that are happening across businesses ever since the onset of the current situation and this is much understandable.

Here are some of the thought processes, as we at CreditNiravana envisage, on how the debt collection industry is now panning out in the wake of this unprecedent global recession.

Lending has always been risky business, laden with delinquencies, defaulting and inefficiencies that come with it. But it is heading into even more choppy waters& Global consumer debt is estimated to be a whopping $ 120 trillion and the collection success rate in many geographies is alarmingly low. In the US alone, $900 billions of household-debt is considered delinquent.

Considering the sheer size of the outstanding debt, even a small percentage in improvement of the debt collection numbers can majorly impact the overall profitability of the lenders. With the onset of the big data revolution, machine learning and Artificial Intelligence is being used to improve recovery while also addressing most of the other challenges being faced by the Lenders.

Some challenges faced in debt recovery are as listed below:

  • Reactive debt collection process:

    Most Lenders reach out to customers only when they become delinquent. Without understanding the behavioural economics of each borrower, reaching out only when she/he becomesa defaulter will not help achieve positive results.

    The conventional belief in the lending industry is that, once you ascertain the risk level of a customer during the underwriting stage, you have addressed the risk mitigation with respect to that customer. Most customers’ payment behavioural economics is dynamic, and unless you have a robust, scientific system to monitor the payment risk behaviour of the customers dynamically, your risk mitigation process is reactive and will not yield results.

  • Non-Prioritized Collection process:

    Often, collection analytics departments rely on linear demographic segmentation for profiling the borrowers, and for prioritizing the collection process.

    Relying on the borrower’s responsesverbatim, for debt collection results, or taking subsequent follow-up actions often won’t yield positive results.

    Understandably, one’s response when under pressure is subjective and the ‘true intent’is often not reflected in the responses.

    For this, you need to have a dynamic and robust NLP and NLG system to ascertain the real patterns and anomalies in the payment behavioral responses of the borrower, so as to ascertain the correct ‘intent’ of the borrower.

    Lenders need to have a dynamic, real time Ai platform to ascertain contextual payment behavioral economics of the borrowers, for accurate and precise prioritized debt collection process.

  • Non-personalized communication methods:

    While the size of outstanding debt varies, not all defaulters have the same profile, behaviour or motivation factors. Lenders & Collections Agencies however often follow a ‘cookie cutter’ approach in their communications: Stern, firmly worded messaging that has a matter-of-fact written all over them. Such ‘one size fits all’ approach can impact recoveries negatively since it may go on to intimidate or ever irritate the customers even more.

  • Stressful customer experience:

    A recent CFPB survey suggested that out of every four American customer contacted by the debt collectors, at least one reported to have felt threatened.

    Nearly 40% of them were contacted more than 4 times a week by collectors, often at inconvenient times, and out of four customers, at least three reported that in spite of repeated requests to stop calling them, the collectors continued to call with renewed vigour.

    Customers today have high expectations when it comes to service from Lenders. Even efforts that are seemingly small, such as responsiveness on the social media and personalised communications do make a huge impact on how customers perceive their lender’s brand. It may even alter their loyalty towards the brand.

    Thus, it is critical that the Lender be able to offer consistently delightful experiences to their customers across their transactional journey.

    In reality, however, a poor collection experience often ends up leaving the customer unhappy or angry, irrespective of how pleasant their initial interactions or previous support experience has been. This could lead to a major impact on the brand’s perception and undermine all the investment made to acquire the customer.

Innovations in Debt Collections with Artificial Intelligence (AI) and Machine Learning (ML)

With the advancement in Data science and Data engineering, a variety of large volume data,which are pertinent to debt collection process,can be analysed with the help of Ai and ML-powered tools to derive insights that open new doors to the optimization of collections, increased collection and profitability, as well as customer satisfaction.

Ai and ML find applications are of great importance in four main areas in debt collection.

Dynamic customer delinquency prediction

The Ai platform dynamically analyses hundreds of parameters of structured and unstructured data, and ascertain well in advance as towho is likely to default, and thus forewarn the Lender. This shall allow Lenders to formulate pre-emptive strategies for recovery., for instance, evaluates internal transaction data (loan details, income, location, payments etc), external factors (weather, job data, GDP, micro and macro-economic events) and behavioral influencers (voice data, video data and call notes) to predict delinquencies, and recommend personalized debt collection actions pre-emptively.

Behavioural micro segmentation of borrower risk

Accurate assessment of borrower’s ability and willingness to pay contextually and dynamically, is the key for prioritization and personalization of collection process. A whole lot of the debt collection efforts are still manual processes which include follow-up telecalls, emails and online forms executed at the individual level.

AI tools like help improve process efficiencies, productivity and compliance through intelligent behavioural segmentation and prioritization of accounts, along with personalized recommendations for reach-out.

Personalized communication

The target now is to combibe a human element into the process of debt collections and thereby improve the responses of the customers. It has been noted that certain communications work best only for a certain type of customers.

Advanced NLP-NLG process and Ai conversational engine in CreditNirvana helps to:

  • identify which channel/medium works best for which customer
  • recommend the right tone and sentiment to adopt for the best response
  • deliver these tailored pieces of communication to different customers at the right time
  • provide deep, personal insights of the customers to help steer these conversations in the right direction

Ai Conversational digital first collection process

Using the advanced Ai/ML process and digital tools, reaching out to the customers pre-emptively and personally through Ai conversational methods facilitates continuous customer engagement. This in turn results in enhanced positive response of the customers with respect to their payment behaviour.

Since the conversational process can be mutual(example WhatsApp, WeChat, Messenger etc.) and can happen at the customers’ preferred time, the overall impacts will be much more positive than an interaction at a typical call-centre.

Data driven personalized recovery/settlement proposals

The decision on what recovery or settlement terms to propose to a customer was left mostly to instinct and experience of the debt collectors, owing tonon-specific and linear guidelines in place.

Advanced ML/Ai techniques can leverage data to identify the contextual customer payment dynamics (both willingness and ability to pay) of the customer dynamically,on real-time basis, and can recommend the right settlement terms to propose to each of these customers.

If you are a Lender facing challenges in debt collection processand are wanting to leverage the power of varieties of internal and external data, so asto improve debt collection and recovery, as well as enhance customer experience, may be just right for you.

Find out more and request a meeting here

Federal Aid Has So Far Averted Personal Bankruptcies, but Trouble Looms

Once federal benefits dry up, highly indebted consumers could be forced to file.

Credit…Eamon Queeney for The New York Times

The United States went into the Great Lockdown with the most household debt in history, stagnant incomes for all but high earners and armies of people telling pollsters they were living paycheck to paycheck. Then, for millions, their paychecks stopped.

But instead of a stampede to the bankruptcy courts, personal bankruptcy filings — a useful, if extreme, indicator of the financial health of the American consumer — dropped sharply from April through June, even as unemployment soared, according to calculations by the American Bankruptcy Institute based on data from Epiq Global, a legal research and analytics firm.

Bankruptcy Filings and Household Debt

American households had more debt than ever when the pandemic sent unemployment soaring this spring. But bankruptcy statistics have yet to reflect the struggle to manage that debt; personal bankruptcy filings are in sharp decline.

By The New York Times | Sources: Epiq (bankruptcy); Federal Reserve Bank of New York (household debt)

“Filings have just gone through the floor,” said Henry E. Hildebrand III, a consumer bankruptcy trustee in Nashville. Such trustees supervise the finances of people who have declared bankruptcy and agreed to pay creditors over three to five years. Mr. Hildebrand usually gets 350 to 400 new cases a month, he said, but last month he added just 107. Nationwide, the drop in personal bankruptcy filings is the biggest in 15 years.

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Does Biden’s Student Loan Forgiveness Plan Go Far Enough?

Democratic presidential candidate, former Vice President Joe Biden speaks at Alexis Dupont High … [+]

Former Vice President Joe Biden, the presumptive Democratic nominee for President, released his student loan forgiveness plan in April, and reaffirmed his commitment to student loan forgiveness in June.

Biden’s student loan forgiveness plan goes much further than anything he offered during the presidential primary campaign, and it represents a continuing shift in his policy positions since he supported restricting bankruptcy relief for student loan borrowers in the 1990’s and early 2000’s.

But how does Biden’s plan compare to other student loan forgiveness proposals? And does it go far enough?

Biden’s Student Loan Forgiveness Plan

Biden’s student loan plan would forgive all undergraduate federal student loan debt for borrowers who attended specific educational institutions: public colleges and universities, as well as historically black colleges and universities (HBCUs) and private minority-serving institutions (MSIs). There would also be an income limit for borrowers eligible for student loan forgiveness: only borrowers who earn an income of less than $125,000 per year would be eligible for forgiveness.

Biden’s plan also provides for debt-free community college, and free college at public colleges and universities. Like his student loan forgiveness proposal, however, there would be an income limit for eligible borrowers: only families who make under $125,000 per year would be eligible.

Biden’s plan would also crack down on predatory for-profit colleges, allowing borrowers to obtain loan forgiveness if they are defrauded by these schools, which disproportionately prey on students of color. This appears to be an endorsement of the existing Borrower Defense to Repayment program; under the Trump administration, the rules governing that program have been changed to limit relief and increase the burden of proof for student loan borrowers.

Finally, Biden has expressed support for improving existing federal student loan forgiveness programs, including Public Service Loan Forgiveness. And he has indicated that he supports Senator Warren’s proposal to amend the bankruptcy code to allow student loan debt to be more easily discharged in bankruptcy.

Comparison To Warren’s and Sanders’s Student Loan Forgiveness Proposals

While Biden’s student loan proposal represents a significant policy shift for him, the plan still falls short of prior student loan forgiveness proposals offered by Senator Elizabeth Warren and Senator Bernie Sanders, who also ran for president this year.

Under Senator Warren’s plan, broad student loan forgiveness would have been available to borrowers regardless of the school they attended. Borrowers would be eligible for up to $50,000 in loan forgiveness. Eligibility would have been based on income, but the income limits were higher than under Biden’s proposal. Under Warren’s plan, borrowers who earn up to $100,000 per year would have been eligible for the maximum student loan forgiveness benefit. Borrowers who earn between $100,000 per year and $250,000 per year would have received a gradually reduced benefit. And borrowers who earn more than $250,000 per year would not be eligible to get their student loans forgiven at all. Despite these caps and restrictions, Warren’s campaign maintained that 75% of all outstanding student debt would be cancelled under the proposal, and 95% of student loan borrowers would receive at least some benefit.

Senator Sanders’ proposal went even further. Under his plan, all $1.6 trillion in outstanding federal and private student loan debt would have been cancelled, with no means testing or income qualifications.


Biden’s student loan forgiveness plan represents a significant policy shift for him, and shows that the concept of widespread student loan forgiveness has rapidly moved from a fringe idea to mainstream. However, his plan is not as broad as the plans previously offered by Senator Warren and Senator Sanders.

Some aspects of Biden’s plan have garnered criticism from student loan borrower advocates. For example, the Debt Collective (a student loan borrower activist organization) criticized Biden’s endorsement of the Borrower Defense to Repayment program because it requires borrowers defrauded by their schools to affirmatively apply for relief, with individual determinations to be made by officials of the Department of Education.

“If Biden is serious about redressing the racial wealth gap through student debt cancelation, he can’t leave out for-profit students from his partial cancelling plans the way he currently does,” the organization stated in a recent Tweet. “Those who have been hurt the most are currently left out. If he was really serious about this, he would cancel all student debt.”

Other organizations have also called on Congress to pass broader student loan forgiveness, without limitations based on the school the borrower attended or their income levels.

However, some policy advocates have noted that a plan like Biden’s is more likely to pass an ideologically diverse Congress. And since student loan forgiveness legislation would likely will have to originate in Congress, those considerations might prove to be critical.

Article by Adam S. Minsky

40 million Americans face student loan cliff

The federal government’s emergency relief for more than 40 million student loan borrowers is set to expire at the end of September, amid sky-high levels of unemployment and an overall economy still stifled by rising coronavirus cases.

The looming end of the benefits also comes with a clear political dilemma in an election year: Unless Congress or the Trump administration intervenes, the Education Department will demand monthly loan payments from tens of millions of borrowers in October, just before they head to the polls. The department is already preparing to send warnings to borrowers, starting Aug. 15, about the expiration of their benefits, according to people familiar with the plan.

“People have now priced into their family finances not having to make a student loan payment during this crisis,” said Mike Pierce, who worked on student loan policy at the Consumer Financial Protection Bureau during the Obama administration. “Restarting these payments six weeks before the election seems like a fast way to alienate tens of millions of voters with student loans.”

Congress is now debating ways to avert the student loan cliff in October as it begins negotiating another economic rescue package. Lawmakers are already poised to blow past deadlines to extend other benefits in the CARES Act, such as expanded unemployment payments and protections from housing evictions.

The expiration of the student loan benefits hasn’t been as prominent in the debate over the next stimulus bill — and it’s far from clear whether or how both parties would come to an agreement.

Democrats are pushing an expansion and extension of student loan benefits as well as a more ambitious plan to outright cancel up to $10,000 per borrower — a policy that has increasingly become a rallying cry in the progressive wing of the party.

The House-passed $3 trillion stimulus package from May would continue the suspension of federal student loan payments for another year, expanding the relief to millions of federally backed but privately held loans that were excluded from the CARES Act. The Democrats’ stimulus bill also calls for keeping the interest rate on student loans at 0 percent for at least another year, with a built-in trigger to automatically continue that benefit until unemployment improves.

Republicans, meanwhile, are wary of the cost of student debt cancellation and are instead focused on continuing loan deferments, but only for some borrowers.

“In less than three months, 43 million student loan borrowers will be required by law to begin monthly payments again on their loans,” Sen. Lamar Alexander (R-Tenn.) said on the Senate floor this week. “Many of those borrowers won’t be able to afford those payments.”

Alexander, who chairs the Senate education committee, said his proposal to address the expiring benefits would be included as part of the GOP stimulus bill. His plan calls for simplifying the federal government’s existing array of income-based repayment options, which has long been a priority of his.

Sen. Lamar Alexander speaks during a Senate Health, Education, Labor and Pensions Committee hearing in June. | Al Drago/Pool via AP

Alexander pitched the plan to reporters this week as “an extension of the deferment of monthly student loan payments until students have an income.” But his plan does not extend the CARES Act student loan relief itself. Alexander said his goal was to “change the system for paying back student loans so that you never have to pay more than 10 percent of your income — after you deduct rent and food — on student loans.”

Under those existing repayment options — and under Alexander’s plan — a borrower who has no income would not be required to make a monthly payment, though interest on the debt would continue to accrue. “We’ll have a system of no income, no monthly payments,” the Tennessee Republican said.

But Democrats are already turning down Alexander’s proposal. Sen. Patty Murray, the top Democrat on the Senate education committee, panned Alexander’s plan as an “unworkable proposal” that would “reduce benefits for struggling borrowers in the middle of a pandemic and recession.”

“September 30th is just around the corner— any future COVID relief bill must extend a pause on payments for all borrowers as our country continues to weather this storm,” Murray (D-Wash.) said in a statement.

A remaining unknown looming over the negotiations is whether the Trump administration would take executive action to extend relief to federal student loan borrowers. Existing federal education law gives the secretary of Education expanded powers to change the terms of federal student loans during a declared national emergency.

President Donald Trump in March moved swiftly to use executive action to suspend interest on most federal student loans as the country first began locking down. Education Secretary Betsy DeVos also used her own powers to order a temporary halt to the collection of defaulted federal loans. Congress soon codified those benefit into the CARES Act and also went a step further in suspending most monthly student loan payments for roughly six months.

But it’s not clear whether the Trump administration would again use executive action to avert the student loan cliff. The White House emphasized in a statement that it’s focused on pushing legislative action on the issue.

“President Trump has provided much-needed relief to students and families with student loan debt both through executive action and legislation, and he is committed to working with Congress to help those affected by this virus with meaningful assistance, not bailouts,” White House spokesperson Judd Deere said in a statement to POLITICO.

An Education Department official said the agency had not yet made any decision about a potential extension of the benefits. “The Department is still assessing its options and is focused on doing the next right thing for students, borrowers, and taxpayers,” department spokesperson Angela Morabito said in a statement.

Roughly 40 million borrowers are covered by the student loan relief that’s expiring. Consumer and student advocacy groups have been pushing Congress to extend and expand the student loan relief, warning that the loss of benefits could lead to a jump in delinquencies and defaults.

“We should be talking not about whether to extend — but how long to extend” the benefits, said Whitney Barkley-Denney, a senior policy counsel who works on student debt issues at the Center for Responsible Lending.

“We seem to be dealing in this fictional universe where Covid is getting better and not worse, and unemployment is getting better and not worse,” she said. “The idea that we’re ready to return to payments as usual is baffling to me.”

Pierce, the former Obama-era CFPB official who now directs policy at the Student Borrower Protection Center, said that while much of Congress has been “rightfully focused on the unemployment extension,” the student loan relief expiration also presents “an enormous economic cliff.”

If the CARES Act benefits aren’t extended, Pierce said, “millions of student loan borrowers in the middle of the recession are going to fall behind, they’re going to default, and damage their credit and face enormous economic consequences downstream.”

While Americans with less education are still far more likely to be unemployed, job loss spiked from about 2 percent in March to 8 percent in April for workers who have at least earned a bachelor’s degree. About 7 percent of those degree-holders are still out of work, according to the Department of Labor’s latest monthly tally.

Some Democrats are again seeking to include up to $10,000 of debt cancellation in the next stimulus. Sen. Elizabeth Warren (D-Mass.) has been pushing the plan, which presumptive Democratic presidential nominee Joe Biden has also endorsed. Democrats are considering including the idea in their party platform.

House leaders narrowed their loan forgiveness provisions in their own stimulus bill this year, citing concerns about cost — a last-minute revision that angered progressives. Under the plan the House passed, only borrowers who are considered to be “economically distressed” would qualify for relief rather than all borrowers.

But outright cancellation of debt, as many Democrats are proposing, remains a tough sell among GOP lawmakers and Democrats from more conservative-leaning districts.

A House vote this month on an amendment that would cancel $10,000 per borrower of private student loans provides a test case. The proposal by Rep. Madeleine Dean (D-Pa.) won only two Republican votes and 15 votes of opposition from Democrats.

But the expansion of the pause on monthly student loan payment and zero-percent interest benefits enjoys much broader bipartisan support. A separate amendment by Rep. Alma Adams (D-N.C.) that would extend that relief for private loan borrowers for another year was adopted by the House on a voice vote. Both amendments were tacked onto the House’s version of the annual defense policy bill and face an uncertain future as the chamber has to hammer out its differences with the Senate.

In addition, there is growing bipartisan interest in extending the CARES Act student loan benefits to a subset of millions of federal borrowers who weren’t covered by the law. As many as 9 million borrowers who have federally backed loans held by private lenders or their college were excluded from the benefits.

In the House, Rep. Elise Stefanik (R-N.Y.), a close ally of Trump, has partnered with Democrats in sponsoring two bills that would expand the student loan benefits to all federal borrowers. In the Senate, Jack Reed (D-R.I.) and Lisa Murkowski (R-Alaska) unveiled a similar plan this month to close the discrepancy between how different types of federal student loan borrowers are treated an expand the benefits retroactively.

“This legislation is one component of what should be a comprehensive package of student loan debt relief,” Reed said on the Senate floor in unveiling the plan. “As the crisis continues, we should extend the repayment relief until health and economic conditions improve sufficiently for borrowers to be able to begin repayment.”