Labor Day weekend traditionally marks the end of summer and the beginning of the Fall season. It’s a time for workers to kick back and enjoy a long weekend with a day off with pay.
However, for many, the recent Labor Day holiday wasn’t a relief from stress. It was a worrisome deadline that marked an end to the Federal Pandemic Unemployment Assistance (PAU), which provided many with stimulus monies to maintain their households. Additional payment deferrals of rent, mortgages, student loans, and utility bills were a way to keep many households afloat during the continuous months of lockdown.
As a result, many consumers are now worried about falling further behind in their bills and payments, without the safety net of extended payment moratoriums.
The Current Challenge
The current economic state isn’t a surprise to those in the Collections industry. The signals that many individual consumers and households were in for a rough time were strong. Back in March of this year, David Silberman of the Consumer Financial Protection Bureau predicted the coming crisis noting,
“These periods of forbearance will eventually end. And when they do, there could be millions of families unable to resume paying mortgages, car payments, credit cards, student loans, who could be at risk of losing their homes, their cars, having their wages and bank accounts garnished, who will struggle to put food on the table and take care of their families.”
NPR has confirmed that millions of Americans are losing benefits as a myriad of payment moratoriums end. In light of this, the Federal Government is urging state governments to tap into remaining Pandemic relief funds to continue to offer some sort of financial lifeline. However, this is not a guarantee. Many state legislatures are reluctant to tap these funds for a continuation of increased unemployment benefits or rental or utility payment deferrals when the demands on school districts, health care systems, and public safety are increasing in light of the rise in Covid-19 cases.
Despite the ending of many of the Pandemic Relief programs, there are resources where consumers can still seek relief from their payments and financial obligations in the interim, including payment suspensions and personal loans.
Yet these temporary fixes may just be putting off the inevitable further, exacerbating an already untenable situation. For their part, Collection agencies and organizations contacting those in arrears seeking payment of late bills will undoubtedly need to remain respectful of consumers’ rights.
What Can be Done?
How can Collection agencies turn up their efforts while remaining respectful of what is truly an unprecedented situation?
One industry blog recommends,
“treating borrowers like individuals; get them to pay what they can by appealing to their personalities. Some people hate the idea of unpaid obligations and will be happy to pay a small amount if they can see the big picture about how it can help them become debt-free.”
This appeal to a person’s sense of responsibility and fairness sounds logical enough. But given the disruption that has occurred in many households due to Covid-19 and seismic shift in debt for many, not to mention the challenge of everything seemingly coming due at once, it may not be so simple.
Further challenges are created by recruitment woes and higher wage requirements and operating costs. Compliance will also be a major factor as agents will need to remain courteous and respectful as they handle the huge influx of both inbound and outbound calls expected in the weeks, months and – yes – years ahead.
The Collections industry is no stranger to disruption. There is a challenge to find good people to help consumers recover their credit and to help originators and companies recover money owed.
Ramping up your contact center and collections operations to handle the increased volume post-Covid-19 isn’t impossible. Our eBook, Conversational AI: Everything the Collections Industry Needs to Know, can help you understand how virtual agents, powered by Conversational AI, can automate collection efforts while improving customer experience and debt recovery as well as reducing operational costs and maintaining compliance.