Monthly Archives: October 2013

Protecting the Consumer: Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) won approval in Congress in 1977. The consumer protection amendment was established to protect consumers from debt collection practices that were deemed as abusive.

The Federal Trade Commission (FTC) puts together a report on an annual basis as an update regarding Fair Debt Collection Practices Act enforcement activities. The report includes the complaints the FTC has fielded regarding debt collection practices that are either illegal, unethical and/or abusive. The FTC reported nearly 80,000 complaints in 2009.

Since 2011, the Consumer Financial Protection Bureau has been in charge of making new rules related to the act, but the FTC still operates as the enforcement authority.

The FDCPA not only protects consumers, it allows them to dispute their debt. There is actually a long list of items the FDCPA does to protect and serve consumers. Debt collectors are prohibited from calling consumers any time before 8 a.m. or after 9 p.m. If the consumer wishes for the collection agency to cease contacting him or her, the agency must obey the wish. If a consumer has hired an attorney to deal with the issue, the agency is not allowed to contact the consumer.

Some of the items in the act would seem rather obvious, but there were predatory organizations that required the measures to be written into law. For instance, a collection agency can’t misrepresent the debt or use deceptive tactics to collect on the debt. Some agencies would say they were tied to law enforcement or an attorney’s office in an effort to get a payment. A collection agent can never use abusive language or profanity in his or her collection attempt.

Another measure that no reputable agency would resort to includes a rule that says they can’t use any tactics that could potentially embarrass the debt holder, like mailing a postcard or contacting people he or she works with about the debt. A debt collection agency can also never threaten to have the debtor arrested.

Reputable collection agencies have always identified themselves honestly in every communication attempt. They have also always notified the debtor that the information gained through the communication would be used to collect debt only. All of these practices are now part of the FDCPA.

So which debt collectors have to comply with the rules set forth in the FDCPA? The rules apply to any person or company that collects debts for other companies on a regular basis. All employees of debt collection agencies and debt buyers must comply with every rule in the FDCPA. There are also state laws that apply to debt collection practices, which means a consumer who feels that they have been abused by a debt collection agency, yet not to the extent that it was a violation of the FDCPA, might still have ground to stand on if the state has tougher laws of its own.

Given the severity of the fines and the public backlash involved in violating the FDCPA, companies are wise to bring in a third party like Omega RMS, llc., to collect money owed to them. Omega has four decades of experience in collecting debt, ethically, honestly, professionally and efficiently.

Why Account Collections Are Important to Avoid a Cash Flow Crisis

Every business owner knows that without cash flow, business growth is very difficult. Waiting on payments from clients is a frustrating experience, especially for small businesses that face more challenges in paying employees, buying raw materials and meeting monthly expenses.

The economy might be improving overall, but waiting on payment from clients is not a situation that is getting any better. According to Dun & Bradstreet, a leading source of commercial information and insight on businesses, the average time it takes for a business to receive full payment from clients rose from 53 days to 54 days.

Dun & Bradstreet’s data suggests that the increase in the time it takes for businesses to pay each other would suggest that the economic recovery occurring in some parts of the economy hasn’t yet hit small businesses. The chain reaction of late payment is likely to blame. When one business doesn’t pay on time, the business expecting that payment is also backed up and doesn’t make their account collections goals.

Mining, communication, utilities and insurance industries are hit the hardest by these late payment situations. Retailers are the slowest to pay their debts, with an average payoff time of 57 days. Utility companies take about 56 days. The timeliest of the bunch are in the transport sector.

Debt recovery experts are busier than ever with a large number of clients seeking their services in recovering debt. In this economic climate, not having a debt recovery expert on your side is a big mistake. Businesses need to have debt-recovery terms in place. A debt recovery team can help businesses construct clauses that can protect them should an account default. Once the account goes to a debt collector, the cost associated with that recovery effort will be added to the bill. Another clause that should help businesses put more effort toward paying their bills on time is a penalty for late payment.

When an organization implements these clauses, their clients prioritize who gets paid first to avoid any fees and penalties. Another tactic to use that helps get you paid on time is to offer discounts for early payment. Some organizations that use sales staff will reward salespersons that are able to collect timely payment on accounts.

Most companies know that a bill that wasn’t paid on the 90th day won’t be paid on the 100th, 110th or 120th. This is when it’s crucial to bring in a debt collection professional. Companies can’t keep sending out statements and simply hoping that the debtor finally sends in a payment. Debt collection specialists know the procedure in getting into contact with the debtor. They also know what to say when they have them on the phone. The conversation is professional, courteous and produces results.

Omega RMS, llc., has more than 40 years of experience in producing results in debt collection efforts. With increasingly strict rules and regulations on the account collections practices being put in place, it pays to have professionals that know exactly what they’re doing on your side.

Lawsuit Highlights Benefit of Outsourcing Collections on Delinquent Accounts

Pursuing consumers and businesses for the money they owe you can be a risky business, especially in light of the Consumer Financial Protection Bureau (CFPB) and the rules and regulations they have instituted.

The CFPB is expected to put a lot of focus on debt collection efforts and draft legislation they will lobby to lawmakers. The legislation isn’t expected to loosen laws governing debt recovery efforts; in fact Bloomberg said last month that the bills would put more restrictions on debt recovery Debt 4efforts.

The Fair Debt Collection Practices Act (FDCPA) places consumer protections on all 50 states, but states also have laws regarding debt collection and going after delinquent accounts that are specific to that state. Industry experts believe the CFPB will seek to make debt collection practices difficult.

The CFPB already issues new rules and amendments at least once a month. For example, last month the agency ruled on an amendment concerning cease-and-desist orders in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

It’s already fairly easy for a debt collection attempt to land in court. One needs to look no further than the recent lawsuit against the Toyota Motor Credit Corporation coming out of West   Virginia. A couple hired a lawyer to help them deal with their debt, yet the collection agency tied to the credit corporation continued making calls to the couple. This business practice is something that is already covered in the FDCPA, which defines it as illegal. Toyota probably has the resources to deal with the court case and come out fairly unscathed, but smaller companies can be severely affected by a lengthy court case.

Cases like this and the fully operational CFPB are perfect reasons for organization with delinquent accounts to ban together with reputable debt collection agencies so they can avoid the pit falls that are encountered on the road to recovering debt.

Keeping your organization out of the courtroom is only one of the many reasons why it’s a good idea to take your delinquent accounts to a debt collection professional. Most organizations aren’t equipped with the technology and expertise to recover debt efficiently (or legally). For instance, debts that go beyond 90 days unpaid are extremely difficult to recover, especially for an in-house department. Industry professionals have the tools to track down these accounts and they have the expertise to communicate with the debtor and set up a payment arrangement.

Another important factor in hiring a professional debt collection service is in consideration of the reputation of your brand. When untrained individuals carry out debt collection efforts, the experience can reflect negatively on your brand, generate bad publicity and cause irreparable damage. Debt collection professionals can actually enhance your public image while boosting your profits through collecting those unpaid debts.

Omega RMS, llc., has more than 40 years experience in the industry and has the innovative tools to create a more favorable return on investment than in-house debt collection attempts, or their competitors. The professionals at Omega have proven strategies that collect on your long lost dollars.

Debt Collection Agencies See an Increase in College Students Falling Behind on Debt Payment

Collections 1Headlines regarding student debt were on the front pages earlier this year when college debt surpassed credit card debt. A recent report shows that more and more students are falling behind on payments.

The Federal Reserve Bank of New York said in a report that the number of students falling more than 90 days behind on their student loan payments climbed more than three percent from 2011 to 2012. About 12 percent of students are in the 90-plus days delinquent category.

Debt related to student loans jumped by $20 billion to nearly $900 billion in 2012. But in July this year, the Consumer Financial Protection Bureau announced that federal student loan debt topped $1 trillion. To make matters worse, due to the federal sequestration, interest rates on federally subsidized student loans doubled to 6.8 percent. That scare was brief as Congress finally stepped up and pushed the interest rates back to previous levels.

Regardless of the reasons for the skyrocketing costs of higher education, students, both traditional and non-traditional, line up at the admissions office during times of financial crisis. When the job market goes south, there’s always education to train displaced workers in a different and more lucrative career path.

Many of these students are taking out student loans, not only for tuition but also for living expenses, which means the debt racks up quickly. The average student loan debt for Americans today has topped $24,000. Students at prestigious universities can easily top $100,000 in debt.

About 10 percent of college graduates will pay $40,000 for their degree. About 70 percent of students at public universities borrow and about 90 percent of private university students borrow to pay for their education.

With nearly 40 million former students living with student loan debt, about 15 percent of them have missed a loan payment. There is at any given time around $85 billion past due. According to one study, between 2004 and 2009, only 37 percent of students were able to pay their monthly installments on time.

This means more and more students are finding themselves in collections with debt collection
agencies.
Borrowers in their 40s have the highest delinquency rate followed by those in their 30s. But it’s students who drop out before finishing their degrees that are at the highest
risk for default or delinquency. About 33 percent of them will likely fall into debt collection.

Unfortunately, the number of students dropping out before earning enough hours to earn a degree is going up. About half of them say that they’re don’t have a job or don’t get enough hours to stay in school. Apart from student loan debt, about 40 percent have around $5,000 or more tied up in other debt.

Omega RMS, llc., is a company that has dealt with former students who have had trouble keeping up with their student loans. Omega treats every debtor with respect and works with
him or her to get back on track. It’s this commitment to ethical and respectable treatment that has allowed them to be an integral part of debt collection agencies for more than 40 years.

Consumer Debt Delinquencies on the Rise

With unemployment numbers remaining stagnant and wages staying roughly the same, consumer delinquencies are on the rise.

The second quarter proved a rough one for consumers attempting to pay off their debt. The American Bankers Association’s composite index regarding consumer delinquencies shot up six points to 1.76 percent. This rise represents the biggest jump in two years.

An economist with the ABA said the economy is affecting how consumers tackle their debt loads. Despite four years of consistent improvements, economists believe that trend has come to a halt and will not improve for some time.High Debt 1

Some financial institutions are fairing better than others. For instance, an Iowa-based organization had zero accounts going 30 days or more delinquent and had a charge-off rate of 0.14 percent in the second quarter. Some might say that the demographic in that area are more responsible with their money and live within their means. Others will point to Iowa’s unemployment rate, which is about two percent lower than the national average.

The ABA tracks eight loan categories when considering consumer debt and delinquencies. These categories include personal and property improvement loans, which saw significant increases recently. Economists have watched the situation improve over the last four years as consumers have become more focused on paying down their debt, but those efforts have leveled off and they are apparent in the latest statistics.

Delinquency, as the ABA defines it, is 30 days over due. Personal loan delinquencies rose to 1.94 percent in the second quarter after hitting 1.82 percent in the first quarter. Also rising during this period were indirect auto loans, but direct auto loan delinquencies actually fell slightly.

Not included in the ABA’s report were bank card payments. However, delinquencies in this category rose from 2.41 percent in the first quarter to 2.42 percent in the second.

A publication from the Federal Reserve earlier this year indicated that consumers had learned to cut back on debt. Consumer debt peaked in 2008 and began a slow retreat throughout the recession. It’s possible that consumers are lacking the confidence of their financial situations, which results in them spending less.

Consumer debt has dropped by nearly $1.4 trillion since 2008, and there is debate as to what exactly is driving that debt load down. Some say the numbers are down because creditors have charged off debt while other believe it’s a result of the shift in consumer spending habits and their attitudes about money and debt. But despite this changing attitude or charge offs, the ABA report indicates that old debt is causing a problem for them as they struggle to stay current on their accounts.

Debt collection companies are offering more creative payment options from consumers that are feeling the pinch. Many small businesses have gotten creative in collecting on debts owed to them as well, but when it comes to collecting from consumers with old debt, debt collection agencies are able to collect at higher percentages. Many companies that want to recoup lost revenues have relied on the debt collection experts at Omega RMS, llc. to help them recover their money and improve cash flow which is vital to the growth of their company.

 

Omega RMS Collections: Help in the Midst of Hard Times

One in five Americans have problems making payments on their credit accounts, student loan Economy 1and mortgage debts. Worse yet, the average debt load for this demographic has risen by 17 percent since 2007.

Consumers who are 60-plus days behind on their accounts had debt that increased from  nearly $54,000 to $62,600 from 2007 to 2012. The biggest portion of that debt is from student loans and mortgages. Shockingly, student loan debt increased by nearly 90 percent over that time period for these delinquent consumers.

The gap between delinquent consumers and those that pay on time is widening. Take mortgages as an example – delinquent accounts saw a 15 percent increase in loan debt compared those who pay on time saw a 22 percent decrease in loan debt.

Student loans and home loans aside, the discrepancies are still evident – delinquent consumers’ credit card accounts rose by 65 percent while non-delinquent consumers saw their debt fall by nearly 30 percent. Economists advise that financing companies and debt collection agencies need to take a different approach to gain back lost revenues to these delinquent accounts.

Some economists believe that consumers are “re-leveraging” themselves, which is supported by statistics from the Federal Reserve. The Fed came out with a report in July that showed an increase in consumer debt by nearly $20 billion, which puts the consumer debt total just under $235 billion. That averages out to about $2,000 per household.

A robust economy depends on a consumer base that spends money. But with more spending comes more delinquency, and companies are partnering with collection agencies to regain some of that lost revenue. There are a variety of agencies in the industry today, and they’re not made equally.

Some companies will go after debtors on their own and put an employee or two or more on the task for a pre-determined number of hours per day. Unfortunately, these employees are often undertrained and overwhelmed and can ultimately do more damage than good.

Omega RMS Collections has a reputation as a leading provider of debt collection solutions. Clients enjoy customized solutions that are leveraged by a client reporting gateway, performance analytics and state-of-the-art technology.

Clients get the transparency they deserve with the client-reporting gateway developed by Omega RMS Collections. The gateway is a tool that allows clients to view servicer remarks and status codes; update progress; track progress and ensure the best experience possible.

The performance analytics at Omega RMS Collections allow clients to make decisions based on hard facts, which helps to strengthen clients’ credit granting policies. Furthermore, the tools and resources include technology that go above and beyond what any in-house collections department utilizes.

Collection agencies like Omega assist consumers in getting back on track with their payments. Nobody wants to be in collections, but when times a difficult, agencies like Omega find solutions that work, and in doing so, they often bolster the image of the clients they work for rather than drag it through the mud.

Customer Debt Collection: Debunking the Myths

Credit Card Debt 1Repaying consumer debt is the most crucial component in the credit-based system that Americans currently enjoy. But with 30 million-plus Americans have defaulted or delinquent accounts averaging $1,400, it is not a surprise that professional customer debt collection services are also a crucial component in the economic process.

The need has grown so large that the industry now employs more than 300,000 people. But despite the resources this industry supplies, myths remain pervasive. The most persistent of these myths, arguably, is that all customer debt collection agencies are inherently bad. Sure, just like in any industry, there pops up a company  that doesn’t follow ethical guidelines or legal guidelines established by federal and state laws. These are few and far between and they don’t last long as lawsuits against them make it impossible to stay in business. Furthermore, a bad reputation in the debt collection industry is a repellent that keeps clients at a safe distance.

Another myth among consumers is that if they avoid the debt collection attempts, their debt is going to go away. Consumers have the right to request customer debt collectors stop contacting them, but that doesn’t mean the debt is erased – far from it. Rather than avoid the debt, consumers are urged to discuss the amount owed and under what terms it can be repaid. If it is found that the debt is inaccurate, the problem can be resolved.

An unfortunate circumstance of the bad economy is that when debtors can’t repay their debts, the debt collection agency that owns the debt is left with an expense. One myth making its way around currently is that the collections industry is seeing a massive spike in profits due to the defaulted and delinquent accounts. The industry might be busier than ever, but these companies own a large amount of debt and can’t collect on it all.

One thing to consider in stereotyping the collections industry is that it is one of the most highly regulated of all the industries in the U.S. Protecting consumers is of utmost importance to lawmakers, which means there are many restrictions placed on the industry as a whole. The myth that consumers don’t have rights when it comes to the recovery process of past due accounts is simply that, a myth. Collection agencies work with debtors to get their accounts current which do a lot for the consumer’s credit score and ability to secure more credit in the future.

Companies like Omega RMS, llc., are leading by example and helping to dismantle negative stereotypes and myths one by one. Omega has more than 40 years of experience behind its debt recovery solutions. Without a solid reputation and a work ethic that aims to please the client, it’s simply impossible to remain in the industry for that long. Omega is also an Association of Credit Collection Professionals member, which means they have shown compliance and work within the standards that only the top tier of collection agencies can manage.

Having a Bad Debt Collection Agency in Your Corner is Beneficial

Contrary to pervasive thought – having a bad debt collection agency working for you is good for business. Reputable agencies protect the image and the profits of the companies for whom they work.

Most companies facing the near impossible task of getting a client to make good on past due payment give up. And those late accounts eventually eat away at profit margins, hamper cash flow and business growth. The solution to this problem is to hire a bad debt collection agency that will work to regain lost revenue.

Most accounting departments consider bad debts an expense. Companies do everything they can do to reduce expenses, so it makes sense to take on a bad debt collection agency to reduce the expenses related to late and non-paying accounts.

In many cases, a collection agency doesn’t cost the company anything until they begin recouping money. When organizations hire an employee specifically to collect on bad debt, they lose money because that person has to be paid even if they don’t have success in collecting bad debt.

Another reason it’s beneficial to have a bad debt collection agency on your team is that they have the necessary training and technology to track down old debt and collect on it. They collect your money efficiently and fast, much faster than an in-house operation that will likely be understaffed, undertrained and lacking technological tools to succeed.

Collecting on old debt is challenging. Not only does it take skill to get these clients to make good on their debt, there are many consumer debt regulations that must be followed. The Fair Debt Collections and Protection Act protect consumers from practices that a few businesses in the industry committed, which hurt the image of the collections industry. Reputable agencies know the provisions of the act inside and out. They’re also licensed to practice in all 50 states and know the regulations pertaining to those states.

Many debt collection agencies have lawyers on staff. When an organization teams with a Collections 8collection agency they’re gaining the added benefit of these lawyers, which gives them an added measure of assurance that any legal proceedings regarding their debt collection efforts will be few and far between.

Once organizations partner with a collection agency, they quickly see what they’ve been missing without them. What they thought were complete losses due to unpaid accounts turn into a reduction in expenses and a influx of money. And taking the collections burden off the company allows them to focus on tasks that will help grow the company.

Omega RMS, llc. is a company that has many years of knowledge in debt collections, which they use to benefit their clients. The collection services provided by Omega follow strict industry regulations that ensure a quality partnership that boost the image of their clients. At the same time, they help regain lost revenues, which improves cash flow and business growth.

Debt Collection: Save Time and Money With a Collection Agency

Collections 7Extending credit to customers is a smart business move that brings in more business. It also brings in a demographic of buyers that wouldn’t otherwise be able to afford what you’re selling. But it also comes with a touch of risk.

There comes a time in every business venture where a decision needs to be made about what to do with accounts that are late in paying. These late accounts become an expense that adds up quickly and can severely affect cash flow and stunt business growth. But most businesses realize fairly quickly that when they’re chasing down bad debt, they’re wasting valuable resources that could be used in helping to build the business.

Most customers will correct their mistake when the company reaches out and informs them that they are behind on payments, but for those customers who neglect to take action, it’s likely time to involve a collection agency. The older the debt gets, the more difficult it is to collect. Businesses that have tried to tackle it themselves expend too many resources to achieve miserable results.

As much as 50 percent of the late accounts out there today consist of people who pay when they want to pay. Other consumers will make fictitious excuses for why they won’t pay. And sometimes, the consumer will completely deny that they are responsible for the amount due. In any of these three cases, the collection agency is capable of bringing some resolution to light.

Most companies are unable to track their clients who move or change jobs and move and don’t inform them of the new situation. In-house collection attempts are not equipped with the right tools to track these folks down. Debt collection professionals are, on the other hand, quite capable as they are equipped with the hardware, software and knowhow to get in touch with the debtors.

Collection agencies rely on thorough information from you to track these debtors down. They’ll need names, addresses, phone numbers, email addresses, spouse names, occupation and phone number for that place of employment, a list of the disputes, transaction dates and any aliases the debtor uses. These are essential bits of information that debt collection professionals can utilize in their technology that will track them down.

Debt collection agencies save your company time and money because they do all the work and only get paid when they are able to get a debtor to begin making payments (some companies will charge a flat fee for their services). Instead of writing off old debt, companies are getting money they never expected see again go back into their operating capital.

Omega RMS, llc., is a debt collection company with four decades of experience under its belt. They are not only equipped with the right technology, but have a staff of well-trained professionals that know how to effectively communicate with debtors and get them to make their accounts current. They do their jobs with such skill that the can actually improve the public image of your company.