EDITOR’S NOTE: The following was written by Manny Newburger and Tom Good from Barron & Newburger. It has been reprinted with their permission.
As Obi-Wan Kenobi might have put it, this is not the disaster you were looking for.
By now, you may have discovered an unfortunate truth: most disaster recovery plans in the collection industry were designed for the wrong disaster. Everyone planned for acts of God or acts of terrorism. Fire, flood, tornado, hurricane, or other awful event that requires a business to operate from a satellite, temporary, or even mobile location. But all of those plans made a basic assumption – that employees would be able to go to work, even if not at their primary offices. COVID-19 presents a wholly different challenge. Your office is intact, your computers and phones have power and connections, but your employees cannot come to work if exposure to an infected employee has left the rest of your staff quarantined. In addressing the current situation, you may want to examine whether any of your original assumptions are still valid.
Perhaps the most important thing to consider in addressing hardship is that there is no one-size-fits-all solution. First, not everyone is in need of help. While a frightening number of Americans may end up on unemployment and bankruptcies seem certain to rise exponentially, many businesses are operating without interruption, and many consumers are being paid as usual.
This email is intended as a reminder of discussion topics on both internal and external impact. In the COVID-19 world, are you considering the following?
What will you do about people who try to take advantage of existing settlement campaigns? You invested in 10,000 letters offering a limited time discount. Now, people who are worried about the economy may want to get rid of what debts they can. But when they call your office, what if you are closed? Will they give up? Will they find others to pay instead? Will they (unfairly) sue you for not letting them take advantage of the offer? If you are closing, you may want to consider how many options need to be covered by your temporary phone system greeting. . A complex phone tree could be needed, with daily or even hourly monitoring to address urgent issues.
How will you handle existing payment plans? Will you continue to deposit checks and run EFT’s to ensure that arrangements are honored? If not, do you risk suit from the lawyers who seem to specialize in suing debt collectors over broken payment plans? Do you proactively reach out to people with scheduled payments to see if they need a deferment, and if you do, how long can you survive paying employees to call people and suggest that they not pay you?
If you receive payments online, are they credited immediately? If not, how will you ensure timely credit? Are you confident that if you have a temporary shutdown the balance demanded the minute you start calling again will be the correct balance?
If you shut down, will you be able to stay on top of correspondence that carries with it legal duties? Will cease and desist requests, requests for validation, and letters of representation be identified and logged on a timely basis to ensure that when calls resume you do not create avoidable litigation? How will you handle time-sensitive correspondence such as credit disputes?
If you are a law firm, how will you handle litigation deadlines? While courts may close and hearings and trials may be postponed or conducted telephonically, appellate deadlines are jurisdictional. Can you protect your clients?
In the weeks ahead collectors need to become compassionate questioners. The ability to ask questions, really listen to the answers, and evaluate on a case-by-case basis is going to be critical. If you assume that everyone needs a blackout, deferment, or hardship plan the next bankruptcy could be yours. If you are heartless, tone-deaf, and intractable the next CID, enforcement action, or headline will quite probably be yours.
Good compliance is good collections. The consumers with whom you interact in the coming weeks will remember the compassion, humanity, and respect that they receive from your collectors. If you are a law firm, the manner in which you handle everything from continuance and extension requests to post-judgment remedies will probably be remembered by your local judges for a long time. You may want to think carefully about the impressions that judges will be forming of you and your clients.
We have been trying to help the industry not miss important questions and issues flowing from the present emergency. We are concerned that answers are far more complex that any of us might desire, and we urge caution against the assumption that past initiatives are present solutions.
