The bill collections industry is taking a shine to a not-so-new method of getting people to pay their debts: online. Called the virtual debt collection, the process enables the debtors to take charge of what they should, without the stress or the hassle of dealing with harassing telephone calls or threatening letters.
However, debtors can visit the web site to develop a payment plan on their own schedule.
The method results in increased collections for many companies, by industry, which is formally known as the receivables industry.
“Collectors do not have the best image or reputation in the market, and virtual libraries have become popular in part because it is the convenience of online transactions and in a less threatening environment,” said Ken Paterson, director of service credit counseling at Mercator Advisory Group, a financial research firm in Massachusetts.
An industry survey by FISite Research found debtors preferred,4 to 1-a, to manage their accounts online and on their own rather than by phone with a real person.
That was the case of Elizabeth, a software engineer in Denver area who asked that her last name not be used because she is embarrassed that fell behind on their bills after a layoff two years ago.
“I had these bills, and I knew I owed them,” said the divorced mother of two. “But every time the phone rang from a collector, I just squirmed into a corner.”
Once your financial situation improved, Elizabeth said she was ready to deal with debts but chose to avoid talking with a hard-pressing, high pressure manifold.
“I went virtual,” she said, “and it was much easier to treat. I took my time and decided how to handle what was wanted.”
From a business perspective, anything that improves on collections gets attention, and the virtual model is moving about 10 percent of a company-offs to their income, according to industry leaders.
An industry leader is looking virtual collections count up to $ 100 million a month, according to industry, which generally does not identify specific customers.
“These are payments from consumers who have gone wrong and thousands of dollars in terms of mortgages saved from foreclosure,” said Bill Kinnelly, SVP of Online Resources Corp., which designs systems for the collection of seven the top 12 credit card issuers such as First National Bank of Omaha.
One aspect of virtual collection’s popularity is that it is available 24 hours a day. About 20 percent of users visited after hours of Federal law restrict collection calls, such as annoying interruptions dinner.
“These are people who would not talk to a human or for those who simply is not appropriate between 9 and 5,” said Kinnelly.
But like all things online, a measure of caution should prevail, says personal finance expert Gerri Detweiler.
“I’d be leery enough to check out the website to be sure it’s not a phishing attempt,” said Detweiler of Credit.com.