The role of automation in debt collecting

The role of automation in debt collecting

| Jun 1, 2020 | Firm News

California companies that engage in debt collection activities may benefit from automating their processes. The use of technology to review a debtor’s income and net worth may make it easier to determine what type of settlement to offer that individual or business. Automation may also minimize the possibility that a company will violate the Fair Debt Collection Practices Act or California’s similar Rosenthal Act. This is because a person will have fewer decisions to make and fewer chances to make an error.

For instance, procedures can be created that make it impossible for a collector to send letters that contain threatening or inaccurate language. Debt collection companies may also create systems that prevent an employee from calling a debtor too many times per day. In addition to avoiding potential legal problems, an automated system may help debt collectors work in a more efficient manner.

Benefits of an automated process

It is important to note that automation is only a tool in an effort to obtain money from debtors. Ideally, debt collection companies will attempt to use it as a guide to help predict which customers are most likely to pay what they owe. It can also be used as a way to help customers create plans to pay down their debts. By acting as a partner in getting a person out of debt, a collection agency may have more success in obtaining what it is owed.

Companies that are engaged in consumer debt collection may want to work with an attorney to develop collection policies. This may allow them to spend more time talking to debtors about plans to settle past-due balances as opposed to plans to settle lawsuits. However, if a lawsuit or other dispute does come up, an attorney may help a debt collector protect its interests during settlement talks or at trial.