Members fall behind on their loans for many reasons. While those reasons typically are predictable, finding the root cause for delinquency is critical to the collector’s success, says Mark Hedge, president/CEO of Central Portfolio Control (CPC).

“Job changes, increasing housing costs, medical bills, and divorce are the most common reasons for delinquency,” Hedge says. “Unless the collector is aware of what’s going on in the member’s life, they’re not going to be able to assist them. I believe that collectors unable to pinpoint the reason for default are operating at a significant disadvantage.”

The attempt to understand a member’s circumstances is central to CPC’s work, particularly with credit union members who are in arrears. Hedge says his company strives to personalize the collection experience and gain the individual’s trust.

“We assign an individual team member to an account so the person answering the phone or responding to our outreach recognizes the name,” he explains. “We like to have those accounts with one collector from beginning to end so they’re focused on building the relationship and getting that person back in good standing.”

‘Most people want to be honest and tell you what’s going on.’

Dan Picard

The key is connecting with the member and proving you’re a resource who’s invested in helping them get back on their feet, says Dan Picard, vice president of consumer lending at $1.4 billion asset Hanscom Federal Credit Union in Littleton, Mass.

“We certainly hear all kinds of reasons for why people can’t make a payment,” Picard says. “Most people want to be honest and tell you what’s going on because they want you to help them remedy the situation.”

While dishonesty among consumers occurs, it’s not the norm, Picard says, adding that most troubled accounts recover fairly quickly.

“We can’t spend a lot of time worrying about the handful of people who are not being honest,” he says. “If we’re doing our job and establishing relationships with our members, most delinquent accounts will turn into good loans again in a short period of time. Our goal is to maximize the percentage who get there by truly being of service to our members.”