Why Use the Services of a Debt Collection Agency?
By JoAnn Smith Heckman President/C.E.O.Collections Unlimited This article is another in a series about companies that provide services to timeshare owners or their resorts. This is a question asked of third party collection agencies on a daily basis. Our response: Why not? It is the fiduciary responsibility of every Board of Directors and Management Company to collect the annual assessments from their owners. Since most Condominium Documents or Association By-Laws allow for the cost of collection to be passed along to the delinquent owner, there is generally no cost to your Association for this service. The annual assessment statements mailed to the owners should include a notice that advises the owners of the date the assessments are due, the date penalties and interest will be charged, and the date the delinquent accounts will be assigned to an outside third party collection agency. By providing this information to all of owners early in the game, it may increase the percentage of assessment payments received by the due date. Some Associations have an in-house collection program, while other Associations continue to send monthly statements to their delinquent owners. What is the cost to the Associations to mail monthly statements? How many owners are at home to be contacted via telephone between 9:00 A.M. and 6:00 P.M. – the common hours worked in a resort’s front office?
With these questions in mind, by assigning your delinquent accounts to a professional third party collection agency, your resort will no longer incur the cost of preparing statements and the cost of postage. The collection agency will now be sending the notices to the delinquent owners. Your resort’s staff will no longer be making collection calls, which will give them the time to service the owners more efficiently and effectively. The third party collection agency employs professional and courteous collection specialists trained in resort collections that can call delinquent owners between the hours of 8:00 A.M. and 9:00 P.M., during the week and on weekends. So when is the “right time” for an Association to turn over delinquent accounts to the collection agency? We suggest turning the delinquent accounts over to a third party collection agency 90 – 120 days after the due date. There are many reasons for this. Third party collection agencies have the technology and knowledge to locate owners who have relocated without notifying their Association. We can also locate information on owners who have filed bankruptcy, passed away or are divorced. It is important to obtain this information early on, especially if the agency is filing a claim on behalf of the Association against a decedent’s estate, retrieving a deed in lieu of foreclosure in a bankruptcy case or working with a divorce attorney to establish which party will maintain ownership of the timeshare interest and ensuring the
applicable conveyance documents get recorded. Waiting months to turn delinquent accounts over for collection only decreases the Association’s recovery of the delinquent funds. As with any major business decision, it is also important that the Board of Directors or Management Company thoroughly investigates any third party collection agency they may consider partnering with. You will want your Association or Management Company to inquire as to the services offered and if they are an industry-friendly agency that is knowledgeable about all aspects of the timeshare industry and resort collections. Ask how long they have been in business, and request references. Does the agency continue collections throughout the full term of the collection contract, making regular contacts with the delinquent consumers? Does the agency’s computer system provide the information and reports required by your Association or Management Company? Does the agency provide any type of software so that your Association or Management Company can review the status of the accounts in real time? Will the delinguent owners be treated courteously by collectors that are familiar with the amenities, programs and incentives offered at your resort? What special services does the agency offer to assist in decreasing the receivables portfolio? Is there a deed in lieu of foreclosure program, etc.? The bottom line is this: Contracting with a third party agency allows more time for your resort’s employees to provide the best possible customer service to the owners and will increase collections to help contain assessment increases.
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