Thinking about Our Borrowers, First!
COVID-19 has infected nearly 750,000 across the world and over 150,000 in the US alone. As our society responds with social distancing to flatten the curve, it has resulted in large-scale shutdowns of businesses, schools and offices.
The economic impact of coronavirus is likely to be very severe, leading to widespread job losses and a potential recession. It’s unclear when life will return to normal across the country and estimates range from a few weeks to several months.
Different states have imposed varying restrictions on collection agencies too and collectors need to adjust to changed circumstances. Several lenders & institutions are offering accommodation to borrowers impacted by this crisis. We need to communicate the requirements correctly so they may benefit from the programs. However, as they themselves transition to working remotely, agents may have to reach out and request payments from borrowers during these troubled times.
Challenges to Consider When Speaking with Borrowers
In these exceptional times, it’s important to be sympathetic to the new challenges that the borrowers may be facing. The impact of coronavirus and resulting closures will vary substantially from person to person, although a recent Pew Poll showed the majority of Americans expect that coronavirus will have an adverse impact on their household finances. Some of the key things to consider include:
- Temporary workers and contract workers will likely face lost jobs or reduced hours. Many of these workers are not eligible for traditional unemployment benefits and may have little or no income coming into their households for as long as the economic shutdown persists.
- Hourly workers and salaried employees may also be facing layoffs. While some of these workers may be eligible for unemployment benefits, layoffs can mean an income cut as well as a loss of health insurance and other benefits.
- Workers providing essential services, like healthcare workers or grocery store staff, are often working more than usual and are personally at a risk of contracting the infection.
- Retirement or savings account balances are being affected. The stock market has erased virtually all of the gains since the start of the Trump presidency and many people have seen their retirement account balances and other investment account balances fall dramatically. This not only affects retirees on a fixed income but it increases financial tension for Americans across all ages and at all income levels.
- Tax refunds might be delayed: The IRS has extended the deadline to file and pay taxes until July 15, 2020 for the 2019 tax year. For taxpayers who take advantage of this extended deadline, tax refunds will come months later than they otherwise would have. Many people take advantage of their tax refunds to pay back debt they owe so delayed refunds could mean collectors have to wait longer to gain access to this source of funds.
- School closures have inconvenienced parents: Schools across the country have shut down, some for weeks and others for the remainder of the semester. In many places, daycares have been closed as well. This has left parents scrambling for childcare options, some of which may be more costly than their prior care situation. Many parents have also been left without care entirely, which can affect their ability to earn income.
- Borrowers might be caring for a sick loved one: This creates a significant amount of personal and financial stress and may affect income and ability to make payments.
- Many people are worried about rising medical costs. While insurers are waiving copays for coronavirus testing, they are generally not waiving copayments, coinsurance costs, or deductibles for people who need coronavirus treatment. COVID-19 could necessitate a lengthy and expensive hospital stay, leaving many people very concerned about how they would cope with the need for costly care.
Listening closely to our customers and understanding their sources of financial stress, fosters trust. All of humanity is fighting as one. Collaborating with our customers will help us resolve problems together today and tomorrow.
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