When a collection agency calls, and advises a consumer or
business that they will be undertaking legal action or affecting the credit
bureau file for an outstanding debt, it is essential to follow through on these
consequences. Whether it is the agent
personally, or another person at the company, it is important to have a
mechanism for consequences.
The agency should have a method or tool for the collectors
to control when an item is reported to the bureau, be it a checkbox, status, or
command button on their collection software, or even a hyperlink and login
directly to the credit bureau for unusual circumstances.
As well, if a debt meets minimum criteria of balance and
execution, court action should be started.
For our office, the guideline is a $3000 minimum balance, a delinquency
date within the statute of limitations, and a source of wages that can have a
garnishment applied.
Why all collection agencies are not members of the credit
bureau, or employ a paralegal or lawyer to execute claims is beyond me – not only
could they be in violation of the Collection Agencies Act for threatening
action or consequences they do not have the power to perform, it is a source of
revenue for the agency, and affects the outlook and effectiveness of their own
collection agents.
Every agency should make the technical investment in their
collection software to be able to export a data file to export to Trans Union
Services and Equifax Canada – it is not expensive, and once set up, is not
time-consuming. And the return on this
tool is far reaching, with items remaining on the credit bureau for six years.
For court actions, collection agents can be trained to
screen and assist with initial paperwork for a small claims court action, or
liaise with an affiliated lawyer to undertake a general court action. This should not be seen as a failure for the
collector to collect on an account, but recover an account that they would
otherwise be unable to collect on, without continuing with repeated calls and
letters with a diminishing ratio of returns.
If a collection agent knows for a fact that their agency
affects the credit rating of debtors, they will speak with knowledge and
confidence when speaking to debtors through the course of their day. If a debtor who previously refused to pay
calls in a year later because they have been denied credit, the collection
agent will know that their office has the power to affect people with a push of
a button.
The key here, of course, is to educate the collection agents
on the process for reporting to the bureau or legal action – the more
knowledgeable they are, the more effective they will be when presenting these
consequences to the debtor.
Lastly, follow-through should also include the collection
agent reviewing the file after consequences have been brought to bear – the debtor
may wish to resolve the default judgment before garnishment, or may want to
resolve the claim before you apply compound interest to the already existing credit bureau listing.
If you have any questions regarding credit bureau reporting
or civil legal actions, or collection agency infrastructure that includes these
processes, please feel free to contact myself.
Blair Wettlaufer
Kingston Data and Credit
Cambridge, Ontario
226-444-5695
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