Category Archives: International News

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.”


Chicago Lifts Suspension on Debt Collection

The suspension applied to debts owed to the city.

Chicago Mayor Lori E. Lightfoot announced that the city of Chicago has lifted a temporary suspension on debt collection practices and non-safety related citations and impounds, as well as penalties for late payments. The order pertained to debt owed to the city of Chicago.

According to a news release from Mayor Lori Lightfoot’s office , the suspension also included a delay on referrals to collection agencies for certain consumer accounts, including utility bills.

The city is in phase four of its reopening plan , meaning, debt collection and payment plan defaults may resume, according to an article from .

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IRS: Private Debt Collection Revenues Up; Taxpayers’ Identity Theft Declines

IRS releases report on identity theft and successful debt collection trends in advance of tax filing season, when collectors can discuss paying debts through refunds with consumers.

Heading into tax filing season, the debt collection industry is poised for continued success helping consumers.

The IRS continues to see increased collections under the private debt collection program and reports private collection agencies have helped nearly 200,000 taxpayers who set up a payment plan or paid their balance in full, according to its latest progress report, “Putting Taxpayers First .”

Revenue continues to exceed costs of the program since 2018. The IRS assigned more than 2.4 million cases to private collection agencies, totaling more than $22.5 billion in balances due, according to the report. The program, which began in 2017, has yielded more than $301.7 million in revenue.

The upcoming tax filing season is a great time for accounts receivable management industry professionals to ramp up communication with consumers about managing their debt payments through refunds. ARM professionals should also be prepared to hear concerns about identity theft and fraud.

Consumers are subject to tax-related identity theft when someone steals their Social Security number (SSN) to claim a tax refund or earn wages. If consumers get a notice from the IRS saying more than one tax return was filed with their SSN, or IRS records show they have wage income from an employer they don’t know, tax identity theft may have occurred, according to the FTC .

Those concerns may not come across the phone lines as much in 2020, however, because the IRS reports that identity theft claims from taxpayers have declined for the third consecutive year.

The number of taxpayers reporting they were victims of identity theft fell 71% in 2018 while the number of confirmed identity theft returns stopped by the IRS dropped by 54%; from 1.4 million in 2015 to 649,000 in 2018, according to the progress report.

Identity theft affidavits submitted to the IRS from taxpayers declined from 677,000 in 2015 to 199,000 in 2018.

Despite the progress, the IRS says in the report it is continuing its tax-related identity theft prevention efforts; making tax season a valuable time for debt collection professionals to continue consumer education and outreach as well.

ACA International members may find more resources on working with consumers during tax season through the ACA SearchPoint® library using the tags Taxes and Identity Theft. ACA International members must be logged in to access the ACA SearchPoint® library.

The tax season begins for individual filers Jan. 27 and the deadline is April 15. The IRS expects more than 150 million tax returns filed by individuals this year, according to a news release .

The upcoming February issue of Collector magazine will also feature coverage on working with consumers during tax season.



Capital One and Other Debt Collectors Are Still Coming for Millions of Americans

As the COVID-19 pandemic hit, Americans got protection from evictions, foreclosures and student debt. But debt collectors have continued to siphon off their share of paychecks from those who still have jobs.

Capital One recovered hundreds of millions of dollars of debt beyond any other card issuer last year and has continued collecting despite a global pandemic. (Drew Angerer/Getty Images)

Since 2018, Capital One has been a looming presence in Julio Lugo’s life, ever since the company sued him, as it did 29,000 other New Yorkers that year, over an unpaid credit card. But when the coronavirus hit the city this March, it wasn’t on his mind.

At Mount Sinai in Manhattan, where he works, he’d been drafted into the hospital’s frenzied effort against the virus. He normally gathered patient information at the front desk of a radiology clinic in orderly shifts, 9 to 5. Now he was working 16-hour days, often overnight. At one moment he might be enlisted to help a team of doctors or nurses put on their full-body protective equipment and then he would rush to disinfect another team. He lost track of the days, only orienting himself by the need to juggle care with his ex-wife of their two young children who were now out of school.

But despite a global pandemic, Capital One didn’t forget about him. The company began in late March to seize a portion of his wages to collect on that debt — one that he says wasn’t even his.

Federal, state and local officials have all taken some steps to protect Americans from the ravages of the economic crash due to COVID-19. Congress halted a substantial portion of evictions, foreclosures and collection on student loans. And when it sent $300 billion in stimulus checks out to families, many states took steps to make sure that debt collectors didn’t grab the money. But one of the most aggressive and common forms of debt collection has generally been allowed to continue: seizure of wages for old consumer debts.

The main protection Americans have gotten from debt collectors has been inadvertent, a byproduct of state courts being closed to most hearings, including those pushed by debt collectors. But this didn’t help people like Lugo who were the target of actions that began before the closures. Wage garnishments can run indefinitely once begun. As a result, essential workers and others who were lucky enough to keep their jobs have still been at risk of forfeiting a portion of their paychecks.

No one tracks wage garnishments either federally or at the state level, and that’s a key reason they get little public attention. But ProPublica has found that it hits workers earning $40,000 or less the hardest and is particularly common in predominantly black communities. Because garnishments are set at a percentage of income (25% in most states) regardless of whether someone can afford it or not, they often provoke a financial emergency and cause the debtor to let other bills go unpaid.

While new collection activity has dropped off, some major debt collectors have been laying the groundwork for a return to normal by filing suits by the thousands, according to a ProPublica review of online court records from county and state court websites. For example, in Maryland, two major debt collectors alone filed over 2,000 suits in April.

When the courts fully reopen, as they already have in some states, these companies will be first in line to win new court judgments. Those debtors who still have jobs will be forced to either make payments or risk their wages being seized. With 48% of American households having experienced a loss of employment income in the past few months, many will have no wages to take. But debt collectors can be patient and wait until they do.

Even more worrying to consumer advocates is what lies ahead. Households often rely on credit cards during moments of financial stress. In recent months, more have been paying rent with their cards. Eventually the bill will come due, which could lead to a wave of collection suits as the nation attempts to recover.

“There’s going to be a whole swath of people who never thought they’d be in a position to default,” said Pamela Foohey, a law professor at Indiana University who argues in a recent paper with two colleagues that Congress should impose a debt collection moratorium to allow for recovery. “It’s not productive to be garnishing people’s wages when they need to pay for food and get back on track financially,” she said.

Over the past couple decades, Capital One, Lugo’s pursuer, helped lead the way in transforming the nation’s local courts into collection machines. As recently as the 1990s, these courts conformed to the picture most people have in their heads, primarily working as a venue where a judge resolved disputes between two sides represented by a lawyer. Now the most common type of case is debt collection, a recent Pew Charitable Trusts report found. Lining up against debtors who are almost never represented by an attorney, debt collection companies win millions of court judgments each year, which then allow them to seize debtors’ wages for years into the future. An old unpaid bill will fall off a credit report after seven years, but a court judgment can haunt someone forever.

While different types of plaintiffs may flood the courts in different areas (from payday lenders to nonprofit hospitals), those collecting on credit card debt have driven this trend over time, according to ProPublica’s review of court data from several states.

The change has been obvious in courts everywhere, from New York to Las Vegas (where the local court decided to give such cases their own category, “Civil – Credit Card Collection”) to rural Iowa.

“It does bother me that courts have become sort of a tool for credit card companies. We’ve just become part of their business machinery,” said Judge Chris Foy, who presides over the district court in the small town of Waverly, Iowa.

The most common plaintiffs don’t tend to be household names that advertise with bold TV campaigns: Most are debt buyers, companies that buy up bad debts in bulk. The exception is Capital One.

Aggressive debt collection is key to Capital One’s profitability. Last year, the same year the company reported $5.5 billion in net income, it recovered $1.4 billion from its card accounts that had been previously charged-off, or recognized as losses. It was a haul hundreds of millions of dollars beyond any other card issuer, even much larger ones like JPMorgan Chase.

In a statement, a Capital One spokeswoman said the bank files more suits than other banks because it makes riskier loans. According to public filings, as of the end of this year one-third of Capital One’s cardholders had a credit score under 660, generally considered the threshold that identifies those most likely to have trouble paying debts back. The bank’s current card offers for such customers carry an annual interest rate of 27%.

“Most regional, community and especially large banks retreated from the subprime segment to focus on more affluent customers, resulting in a growing population of people with less access to the banking system,” the spokeswoman said. “Capital One remains a full spectrum lender.”

“Debt collection for us is about helping customers resolve their delinquent debt and reducing losses, not making money,” she said, and the bank always attempts to work with borrowers before suing. As for Lugo’s case, the company said it couldn’t comment because it was currently in litigation.

The best estimate of the national scope of garnishments comes from ADP, the nation’s largest payroll services provider. At the request of ProPublica, ADP first undertook a study of payroll records six years ago. It followed up with a second survey in 2017. Both times, it found that 2.9% of workers had their wages garnished for consumer debts in the previous year. That works out to about 4 million nationally. Notably, both surveys were done during a period of economic expansion. In the Great Recession, between 2007 and 2009, the number of suits skyrocketed, according to ProPublica’s review of filings from several states.

Court judgments also allow collectors to seize money from bank accounts, often emptying them. But taking a portion of a paycheck is far more common, according to a ProPublica review of court data in Missouri and Georgia.

When the coronavirus outbreak hit, New York, like many other states, took several steps to protect vulnerable people, such as halting evictions or new garnishment orders. But the state let existing wage garnishments continue. Consumer advocates and the New York City Bar called on Gov. Andrew Cuomo to fill that gap and suspend all garnishments. So far, he has not, despite moves by some other states, such as Nevada, to do so. In New York, plaintiffs can take up to a tenth of a debtor’s pay.

Cuomo’s office did not respond to a request for comment.

Lucian Chalfen, a spokesman for the New York State Courts, told ProPublica that garnishments were allowed to continue because “existing orders were considered essential matters.”

Those burdened with a garnishment amid the pandemic could request an emergency court hearing to have it suspended, according to guidance given to the city’s marshals, who administer garnishments. Michael Woloz, a spokesman for the marshals, said they “do everything they can to accommodate” people with hardships.

Susan Shin, legal director of the New Economy Project, a legal aid organization in New York City, said her group has been getting calls since March from New Yorkers asking for help with ongoing wage seizures. Capital One was often the plaintiff. People were afraid of risking their health to go out and seek help from the courts. “Why put someone in that position?” she said. Relatively few people who need help find their way to legal aid.

ProPublica spoke with three New Yorkers who struggled to address seizures of their pay after the pandemic hit. Although all three managed to eventually halt the garnishments with the help of a legal aid attorney, the cases show how such suits can hang over people’s lives for decades. Two of them asked ProPublica not to use their last names out of fear it would displease their employers.

Capital One, asked about the cases, said, “Our policy is to work with any customer who needs help and is impacted by COVID-19.”

Capital One sued Robert in 2007 for about $1,900. He is HIV positive and fell behind because of health issues, he said, and has been in and out of work over the years. For almost a decade, he said, he didn’t hear from Capital One. But last fall, soon after Robert began a new job, he received notice telling him to arrange payment on the debt or he would be at risk of garnishment.

He eventually struck a settlement to pay Capital One a total of $300 on a payment plan of $20 a month. But shortly after he made his first payment, he was shocked to find that his wages had been garnished anyway. The seizures continued for weeks, well into March of this year. Both Capital One and the marshal’s office told ProPublica that Robert’s employer had been sent notice not to execute the garnishment, but that it had done so anyway in error and that the checks had been promptly mailed back to the employer.

Capital One sued Grace, a social worker in Queens, in 2013 after she lost her job and fell behind on her payments. Like Robert, she said she hadn’t heard from Capital One for years. In February, she received a letter from the marshal warning her that her pay would be garnished if she did not make other arrangements to pay off her debt of $2,800.

When the virus hit and the courts largely shut down, she assumed it was a problem that could wait. “I was just trying to get by,” she said. After the garnishment started, she searched online for help and found her way to Shin, the legal aid lawyer. The money has since been returned, but Grace knows the seizures could start again when the courts reopen.

Given Lugo’s hectic days and nights working at the hospital, it wasn’t until mid-April, when 500 New Yorkers were still dying every day from the virus, that he discovered $168 missing from his latest paycheck. Although he was sued in 2018, he didn’t find out about the suit until his wages began to be garnished last year, he said. One reason is that the debt is not his, he said.

In a legal filing, with the help of a legal aid attorney, he argued that his now-deceased father likely stole his identity to take out the card. A process server falsely claimed to have served his mother with notice of the suit, he said.

The filing stopped the garnishments last year, but in early March, he missed a court hearing because it conflicted with a parent-teacher conference at his child’s school, he said. He thought the hearing would be rescheduled, but unbeknownst to him, it triggered a new garnishment.

“Being that the courts were closed, I couldn’t understand how they could just start taking out money again without letting me know,” he said.

Eventually, again with help from a legal aid attorney, he was able to stop the garnishment and get a new court date, currently set for August.

After the virus hit in March, Capital One largely suspended filing any new debt collection lawsuits. But other big debt collectors did not, including Encore Capital, the nation’s largest debt buyer. ProPublica reviewed online court filings in eight states where courts had largely stopped hearing new cases and found that Encore still filed over 1,600 lawsuits in April.

Encore reported collecting $1.3 billion in old debt in the U.S. last year and was looking forward to another good year when March came.

Encore CEO Ashish Masih told analysts last month that the company is still optimistic. Widespread unemployment and the courts closing hurt the company’s near term prospects, but Masih said this would only cause a “delay, not a permanent loss” in what the company hoped to collect in 2020. Eventually, he said, “the court processes will start working,” and “we hope to recoup about 90% of collections over time.”

In response to questions from ProPublica, Encore said that according to its company policy, “We’ve suspended collections for any consumer who lets us know they’ve been directly impacted by COVID-19.”

Across the country, courts are taking steps to resuming full function. In Arkansas, where the virus did not initially hit hard, but has been spreading faster lately, the state supreme court announced in early May that all courts could reopen to hearing any type of case starting May 18. How exactly to do this is up to local courts, and solutions range from video hearings to in-person hearings with a limited number of people in the courtroom and temperature checks before entering.

Wage garnishments in the state never stopped, said Susan Purtle, an attorney with Legal Aid of Arkansas, which serves almost half the state. That’s partly due to the large number of meat processing plants there, she said. “Those clients have continued to work,” she said, and so had wages to take.

But recently, she said, calls about new suits have been coming in. Typically, she’s seeing court hearings scheduled for July or August. Once they begin again, collectors will resume winning judgments that can be used to collect on the debtors who still have jobs. For the ones who don’t, the companies will wait until they do.

by Paul Kiel and Jeff Ernsthausen

International Debt Collection: Key Challenges and Best Practices

These days businesses provide their customers with the option of purchasing their services worldwide with just a single click, but ensuring that customers pay on time seems to be an uphill battle.

As a result, however, cross-border debt is also on the increase. And what businesses often forget is that international debt collection is a complex process that differs from country to country.

Collecting international debt is no easy task, so it’s essential to try and rely on a number of factors that will help make your procedures easier.

In this article, using my experience of working with clients who have their debt collection operations in a number of countries, I’ll show you what the main challenges of international debt collection are, and what techniques you can introduce to make your processes easier. So, here we go with the Good, the Bad and the Ugly of international debt collection!

What are the main challenges of international debt collection?

There’s no doubt that collecting outstanding debt is a real pain in the neck – especially if you need to collect cross-border debts from foreign customers located around the world.

Considering some of our clients dealing with debt collection processes in more than 5 countries, one of the main challenges of international debt collection is definitely the ability to measure and compare the performance of debt collection between particular countries.

In fact, the methods of collecting debt, rate of willingness to pay, supported payment options, salary ranges and regulations vary from country to country, making it a very challenging job to measure whether a company’s debt collection operations are actually bringing in profit or instead making additional losses.

For example, in Hungary and Poland 40% of outstanding debts are paid over the phone, while in other European countries this method is rarely used. Furthermore, in certain countries debt collectors utilize SMS messages in order to notify debtors of their outstanding debts, while in other countries SMS is not considered an official notification.

Another major international debt collection challenge is that debt recovery process rules are regulated at a national level, and companies need to be aware of the different country-specific rules and regulations.

For instance, in most countries, it is prohibited by law to pay outstanding debts by credit card as it means transferring debts from one bank to another. On the other hand, in other countries settling debts by credit card is allowed by law (although it is not recommended).

As if that were not enough, courts also operate differently in different countries, so when companies have no choice but to take a debtor to court they may face significant obstacles depending on the country’s individual regulations.

In Australia, for example, courts refuse to take action on outstanding debts that are older than six years. However, in Hungary, this limit can be five, three or even one year, depending on the type of outstanding debt.

In order to reduce the impact of the above-mentioned challenges, companies tend to carry out their international debt collection processes from one central point. In other words, they operate their debt collection processes in, let’s say, 5 countries from one premises.

In such cases, having debt collection agents who speak the language of the debtors well enough to be able to deal with financial and legal terminology is of the utmost importance. And of course, finding and hiring such a workforce is another great challenge for companies that cope with international debt collection, especially if the languages in question are not widely used.

Finally, if your company has debtors who are located in several continents, different time zones will also make your processes more complicated. Handling negotiations across a number of time zones and reaching a customer on the phone who is located on the other side of the globe can easily turn your processes into a never-ending nightmare.

As such, if your business wants to collect debts from customers based around the world, then you’ll certainly need to rely on debt collection agents who will also be available outside regular business hours.

Best practices that make international debt collection easier

I could certainly go on with my list of further challenges, but let’s instead look at some best practices that will definitely allow you to improve your international debt collection processes.

So, here are my top tips to turn your debt collection nightmare into a profitable business:

1. As we already discussed, finding agents with the appropriate language skills is not an easy task at all. Furthermore, there’s no doubt that being a debt collection agent is not on the top of the list of employees’ dream jobs.

These days, companies all around the world struggle with labor shortages, so you’ll really need to go the extra mile in order to lure the best-suited debt collectors to your team. And although it may seem a tricky task, with some smart HR tricks even debt collector jobs can be made attractive to employees.

For instance, it’s a great idea to set up your debt collection hub in an area that is considered relatively popular among job seekers. By outsourcing your operations to, let’s say, a Mediterranean country and covering the costs of relocation, chances are you’ll be able to attract skilled foreign talent to your debt collection team, with the subsequent benefit they bring to your processes.

2. Furthermore, in order to overcome the difficulties caused by different time zones, make sure to target the newest labor market members, namely Gen Z, and attract them to your team with special offers tailored to their needs. If you’re interested in finding out how to keep the newest generation motivated in the workplace, make sure to check out our article on it.

3. Technology can also play its part. Solutions, such as setting time zones in your IVR technology, as well as the close monitoring of domestic and international KPIs can also be a great help in making your international debt collection easier.

4. Finally, when it comes to debt collection, it is essential to find the balance between the time invested in pursuing outstanding debt and the actual amount of debt that can potentially be collected. As you all know, over time, it’s simply not worth continuing to endlessly chase debt, otherwise you’ll easily end up with extra costs.

There is, however, a groundbreaking technology solution that allows you to speed up your international debt collection processes. Real-time payment technology allows debt collection agents to initiate payment processes with customers during phone conversations regarding their outstanding debt. Thus, agents can combine two debt collection phases into one. With real-time payment technology, collecting debts has never been so easy!

International debt collection requires country-specific knowledge, thorough planning and the willingness to always look for better ideas to ease up your processes. Feel free to follow my tips and probably you’ll too be able to improve your international debt collection processes.