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    Outsourcing Payments | 3 min read

    Tactfully Overcoming the Top 5 Delinquent Borrower Objections

    It’s been a tough 18 months for millions of Americans. The COVID-19 pandemic caused major job losses and employment interruptions, families have had to navigate paying for childcare services after working remotely for over a year, and savings from 2020 stimulus checks and extended unemployment benefits are starting to run dry for many.

    When your collections team encounters a financially burdened borrower who genuinely wants to make his or her loan payments, but is going through a tough time financially, there are tactics your collections team can use to help them. In this blog post, we’ll offer guidance for tactfully responding to common collections objections.

    Objection #1: "I don't know what you're talking about."

    Claiming a debt doesn't exist is a common response to a collections call, and it’s possible the borrower truly does not recall the debt. Refresh the borrower's memory by offering a detailed account of exactly what the loan was used for, when the money was borrowed, and what dates any payments were made or missed. If necessary, consider reminding the borrower his or her signature appears on the loan documents.

    Objection #2: “I just lost my job and can't possibly pay you now."

    This is a tough sentence to hear, and we all understand, sometimes, life happens. Here are some empathetic responses that produce results:

    • Express that you're sorry to hear of the borrower's troubles; unfortunately, many others find themselves in this predicament.
    • Tell the borrower that since your institution understands this issue well, you can work with borrowers to find a good compromise.
    • Depending on the outstanding balance, propose a reasonable amount for the borrower to pay today and a payment plan to pay off the rest.
    • Once you have an agreement on some payment today and a plan for the future, tell the borrower you will call again in 90 days to review the plan, with the hope the borrower will be established in a new job by then.

    Related reading: Working with Borrowers Hit Hard by Financial Hardship

    Objection #3: "My parents were supposed to pay that loan."

    Young adults often don't understand financial adulthood begins at age 18. They are responsible for loans in their name, even if their parents had agreed to pay in their place. Here's how to structure this conversation:

    • Begin by explaining anybody age 18 and over is held responsible for bills and loans.
    • After the borrower understands the legal responsibility, suggest a solution involving the parents: "Since you're an adult, I need your permission to discuss this loan with your parents. Do I have your permission to contact them and ask them for payment?"
    • Secure contact information for one or both parents.
    • Explain to the borrower you will attempt to collect payment from the parents; if you are unable, you will call back to collect from the borrower.

    Objection #4: “I don't have time to discuss this right now."

    An outstanding balance is not something that gets better with time. Explain to "Busy Borrower" that you won't take long. Quickly state the necessary details of the loan and ask for payment. If Busy Borrower still says he or she can't talk, remind him or her it will actually save time to settle the balance now because that will satisfy the debt and eliminate future bothersome calls.

    Objection #5: "I'm not paying that bill because I'm unhappy with the service I've received."

    Ouch! We never want to hear this sort of thing, but unfortunately, it's likely we will at some point. Here's a good response:

    • Begin by saying you're very sorry to hear your institution's service was not up to its normal standards.
    • Ask if the member notified anybody of the trouble at the time, so you can check into the issue and ensure it's addressed.
    • Explain that since member satisfaction is extremely important, your institution would appreciate the member sending a detailed account of the problem. Provide the appropriate contact information for that report.
    • Change the subject to the matter at hand (the outstanding balance) by saying something like, "Thank you for helping us improve our service. However, right now we still need to settle your account because the obligation still exists. How would you like to pay the balance today?"
    • Assure the member your institution will look into the complaint and take appropriate measures to ensure the problem does not recur.

    Delinquency rates are poised to rise in 2022. While collections will always be a necessity for lenders, we can cut the time we spend contacting borrowers if we're more efficient when dealing with objections while remaining empathetic.

    The SWBC Total Solution for risk management, payments, and income generation enables financial institutions to seamlessly perform essential business functions under one platform through one partnership.

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    Ashley Stopinski

    Ashley Stopinski has had a 15+ year career in the credit union industry and hails from Ohio. In addition to leading collection and lending departments at two mid-size credit unions and a large bank, Ashley also provided consulting services to a worldwide repossession and remarketing firm. Ashley was an SWBC client during her tenure at both credit unions. Ashley has been with the SWBC team for 3 years and currently supports our valued partners in the Midwest and Central Plains.

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