If you owe money & have encountered a collections company before you may want to steer clear of them. However, getting to know more about collections companies may help you pay off your debt faster and get back on track. We speak to Michelle Dunn, the woman behind Credit and Collections Blog, about the world of collections and some tips on what to do to avoid feeling the pressure from them.
Since times have been tough in recent years, many of us have gotten ourselves into a bad debt situation. Likely, you’re already feeling down about what you owe and then all of a sudden you get a call from a debt collector. We all have pretty negative images of collection agencies and many of us try our best to avoid the calls.
When it comes to bad debt, avoidance really isn’t the answer. It is really important to realize that the sooner one pays off their debts the sooner they can start to get back on track. Collection agencies act as a go-between with the debtor and lending company. This way they can focus their energy on getting payments in for the lender and often can help to work out a payment schedule for the debtor that’s more manageable. This way a win-win situation can occur.
After recently speaking to Michelle Dunn, we realized that the world of debt collection has changed dramatically in recent years. Michelle has worked in the industry for 26 years starting out as a credit manager for a few different firms and then started out a third party collection agency on her own in 1998. She realized that there was real growth in the collection agency industry and noticed that consumers needed to be better informed about the role collections play.
As a result, Michelle got a lot of media attention and decided that she would take her knowledge and experience to the masses. As a result, she wrote her first book – Starting a Collection Agency – and then sold her collection agency business. Since that initial book was written, Michelle’s written 20 books in total. All the books have their own theme but focus on topics such as credit policies, different acts in the US and other tips for those individuals who are in a stressful debt situation.
Sometimes when people are in a bad debt situation, it is pretty common to do everything possible to forget about it. Although you shouldn’t let debt consume you, Michelle reinforces that you can always try to turn a bad debt situation into a positive one. By reading books on the topic you can start to put a plan in place to resolve your debt issues and may even decide to help others do the same.
Michelle’s first book is in its 3rd edition and has been her most successful to date. After appearing in Ladies Home Journal, she realized that this was the only book on the market about this topic. Although it was first published in the late 1990s, Michelle’s book on starting up a collection agency still holds the title of being the definitive guide on the subject.
How Can this Help Me Improve my Bad Debt Situation?
If you’re in a bad debt situation, you may wonder how understanding more about setting up a collection agency will help you improve your situation. One of the most interesting aspects of our discussion with Michelle was her ability to relate back to people who are struggling with debt. When Michelle started her agency she noted that she “was recently divorced and finding it difficult to make her own payments in some months”. She took that first-hand knowledge and wrote a range of books on subjects such as how to deal with aggressive debt collectors. All of her books allow individuals struggling with debt to change roles and put themselves in the shoes of the debt collector. This can help you relate to them more and also to understand how best to build a relationship with them. Depending on your situation, you may need to deal with them for a while so it’s important to build that understanding.
How things have changed…
We spoke to Michelle a little about how bad debt has changed in recent years. Since Michelle is based in the US, it’s been an interesting time for collectors. She noted that “many would think that there would be growth in collections but it’s actually been a difficult time for collections since people don’t have the money to pay”. She mentioned that collection agencies were doing really well prior to 2008 but there has been a gap in recent years. Michelle noted that “it’s starting to get better but a lot of people aren’t spending as much or applying for new credit”.
If you have bad debt to deal with, Michelle also highlighted that the biggest change in recent years relates to the growth of the internet. Michelle reflected that there was “no internet when she started, which was difficult to investigate collections”. Often, Michelle had to actually go into the courthouse but now you can look these things up online. Michelle reinforced that nowadays “every person who owes money is online”.
Since social media sites like Facebook became popular, they’ve made collection agencies jobs a lot easier. People go on social media and talk about their debt, stresses and what they’re spending their money on. “If you don’t have your privacy settings set properly, debt collectors can see that”. People don’t realize that it’s not private and anybody can see it. She felt so strongly about that this was a reality that Michelle even wrote a book on it – Getting Paid Using Social Media.
Tips for Individuals in a Bad Debt Situation
Michelle said that one of the things that have improved is changes in the US government with regards to payment arrangements. In 2009, Michelle wrote a book about Establishing Payment Arrangements and how payment plans can be a win-win situation for both the debtor and the lender. With the new economy, Michelle notes that “payment plans are the only way to get paid nowadays”. This can really help individuals who are in bad debt as more and more agencies are offering payment plans to salvage their relationship with both parties.
The final point Michelle made was a great one. She highlighted that “most people who are in a bad debt situation are normally good payers and have had good jobs but they lost their jobs”. As a result, their mortgage crashed and they had few options. Most companies understand that these things can happen – especially in this economy – and they want to come to an arrangement even if that means they need to accept a more creative plan.
About Michelle Dunn
In 1998, when Michelle was getting a divorce and had 2 small children, she started a collection agency from home leaving her full time job as a credit manager 6 months later. Her agency did very well and grew over the next 8 years until Michelle sold it to write full time. Michelle knew what business owners needed and had already written a couple of books that were selling well. “But it was still a huge leap”, she says, “I was a single mom with two sons.” I started putting together my ideas, set up an office in my home, and used the income from book sales to fund publishing more books.