Debtsy Is Humanizing Post-Charge Off Collections

When someone doesn’t have the money to pay a bill, the last thing they want is to fend off phone calls from collectors. In fact, those calls aren’t often all that effective.

Post-charge off debt collections put consumers and credit unions alike into an uncomfortable position. But Debtsy’s approach makes sense for all parties—especially as opinions about calling change.

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Put Down the Phones

Few things typify Millennial and Gen Z communication preferences more than the texting vs. calling debate. Ultimately, at this point, there’s not much to debate:

Text-based communications (like email) are less formal but better received than phone calls.

And it’s not just texts. Millennials also prefer emails to phone calls. Not only do they allow the recipient to respond on their own schedule, but they provide a clear paper trail. Written messages don’t disappear at the end of a call.

Finally, there’s one more major problem with calling to collect debt:

With the massive increase in spam calls over the last decade, most people ignore numbers they don’t recognize.

Ultimately, phones are simply not the best way to collect from members anymore.

 

Improve the Member Experience

The team at LiveSurvey would be the first to tell you that a credit union’s NPS score changes depending on who they survey. Consistently, members whose debt is in collections rate their credit union worse than those with better financial standing.

So, keeping members happy when their debt is in collections is key to improving the credit union experience for the most at-risk members. A better post-charge off collections strategy may actually prevent member attrition.

In this case, “better” is about more than just ditching phone calls. It’s also about providing self-service options. In addition to paying in full, Debtsy allows members to create payment plans, settlement offers, and disputes.

 

Drive Performance and Reduce Risk

Whereas most collections companies rely on frequent calls and mailed letters, Debtsy uses a scalable, digital-first approach. Emails point borrowers towards a self-service portal that puts the power back in their own hands.

So, in addition to being less pushy, it also cuts out risks and inefficiencies. Human operators are susceptible to human error and create a compliance burden.

Furthermore, human operators are more expensive to maintain than automated infrastructure. Switching to automation helps Debtsy increase net recoveries by keeping overhead low.

Finally, Debtsy has shown that the digital self-service model improves gross recoveries, too.

 

The Takeaway

Credit unions can better support the financial wellbeing of their communities by removing the predatory aspects of debt collection. And, by putting more power back in the hands of their members, credit unions will improve the lives of their most at-risk members.

Collection strategy is often left out of the digital transformation discussion. But after looking into Debtsy’s approach, we think it deserves a place in there.

It’s ironic, perhaps, that trading in live agents for automation is how Debtsy humanizes post-charge off collections. Yet, it truly shows how far digital technologies have come!