Expand your collectors' role.(SELECTED * TOPIC)

What should a collection agency do when it appears that the debtor has the will and volition to pay but not the means? Should they proceed with a suit? Foreclose on their home? These are often the usual courses of action, and in many cases the only effective one. However, depending on the debtor and their circumstances, a more creative approach may be the way to go.

After running my own collection agency in Tokyo for 12 years (1992-2004), there is one thing that I learned from the debtors that have the will and volition to pay, but not the means: the collector should try to provide a "payment route" for the debtor.

What does this mean ... a "payment route"? It means that if the debtor is unemployed or his business is struggling and doesn't have the means to pay off the debt, then the agent should try to find a way for the debtor to minimize his expenses and generate income. Needless to say, this can be a tall and quite a different order to fulfill.

A little background on Japan's economy: After the economic bubble broke in 1991, through last year, Japan's economy was basically dripping along through a deeply entrenched recession. Blue chip companies that hired employees for life were now laying them off in the hundreds of thousands; and for the first time in post-war Japan, the employment system began to crumble. Not only were companies laying off their employees, but also for a couple of years, companies themselves were going bankrupt by the tens of thousands per month. In response to this massive unemployment and, ultimately, bankruptcy situation, a number of executive search firms and turnaround management companies proliferated greatly.

I'm not sure what your experiences have been, but for me it's unproductive talking with debtors who are struggling just to pay their apartment rent or staff's salaries when they just don't have the income. So what's a collector to do when confronted with this type of situation? Here's a thought from my own experience in Japan.

For individual debtors who were unemployed with very little or no income coming in, we first confirmed if they were serious about finding a job. If they were, then we proposed to them to come to our office where one of our resume writing consultants sat down with the individual, and while consulting with them about their previous employment experiences, helped them to write or rewrite their resume. Subsequently, the candidate was introduced to the most appropriate job search agency with which we had forged a working relationship. With some luck, a position was found and the terms of employment called for a portion of the monthly salary to be paid to the creditors. In this way, the debt was gradually paid off. The result was that rather than suing on a debt that would still not matriculate into cash, the creditor received their monies in full, albeit slowly.

How many of you have ever sat down with a debtor and helped them ...