illegal_alien
01-07-2003, 06:43 PM
Thought it was an interesting article:
Source: http://www.collectionindustry.com/index.cfm?id=9&news_type=2&news_id=8188&pn=&pg=&home=1
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Debt has a Human Face
January 6, 2003 — Is emotional intelligence necessary when collecting debt?
Repaying debt is emotionally satisfying. People feel good about paying off their credit card and guilty about non-payment. Efficient debt recovery is as much emotional as it is financial.
There are three basic psychological reactions to terminal indebtness: panic, sadness and resignation. Some people panic, stall and avoid contact, or when cornered, agree to an unrealistic payment schedule. Mourners deny their debt initially and then become angry and blame others, usually the creditor or collector. (Sound familiar?) Resigners rank their debts according to importance and negotiate payment plans according to available resources.
Recognising the emotional state is the first step in the recovery process. Inexperienced collectors get upset at dealing with negative emotions, especially when they feel unfairly targeted. More in control than the financially out of control accountholder, they will attempt to blame the accountholder: “You spent the money – you have to pay it back!” Blaming only reinforces negative feelings of guilt and shame. The emotionally intelligent collector identifies the accountholder's emotional state and acknowledges it as normal and appropriate for the situation.
By normalising the emotion the collector creates closure and signals that both parties can move to a rational resolution. The collector should say: "It is quite normal to be...........(name the emotional state) about not the situation." Don’t say: "I understand how you feel." Customers often resent this type of assumption as patronising. “I understand” is used so often nowadays that it is trite and as such no longer communicates empathy as intended. Normalising the emotion avoids marginalising the accountholder with guilt. Good collectors use emotional intelligence rather than emotional blackmail.
The assumption that bad things happen to good people allows the collector to balance facts and feelings. The best collectors are firm, realistic, fair and tuned into both facts and feelings.
After the emotion has been normalised, the cause of indebtness should be identified so that an appropriate recovery strategy can be put into place. Generally, there are six causes of terminal indebtness:
Imprudence - who have no money put away for a rainy day and live financially one day at a time
Naivety - who are ignorant of the consequences of too much debt
Dumb luck - for whom, despite adequate planning, some catastrophic life event caused financial collapse
Recklessness - who spends beyond his or her means
Unethical - who have no intention to repay
Accidental - the high-risk customer to whom a card was issued to by accident.
Collection methods for each include: credit counseling for the naive and imprudent; closing the account and taking legal action with the reckless or unethical spender; and a combination of both for the high-risk customer. A compassionate and educational approach is appropriate for the victim of fortune.
The roadmap to better collecting:
Identify the emotional state
Normalise negative feelings
Identify the cause of indebtness
Adopt an appropriate collection strategy
Barry Leckenby is a Training and Quality Analyst with Australia’s third largest bank, the ANZ.
Source: Barry Leckenby, ANZ
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Source: http://www.collectionindustry.com/index.cfm?id=9&news_type=2&news_id=8188&pn=&pg=&home=1
_________________________________________________
Debt has a Human Face
January 6, 2003 — Is emotional intelligence necessary when collecting debt?
Repaying debt is emotionally satisfying. People feel good about paying off their credit card and guilty about non-payment. Efficient debt recovery is as much emotional as it is financial.
There are three basic psychological reactions to terminal indebtness: panic, sadness and resignation. Some people panic, stall and avoid contact, or when cornered, agree to an unrealistic payment schedule. Mourners deny their debt initially and then become angry and blame others, usually the creditor or collector. (Sound familiar?) Resigners rank their debts according to importance and negotiate payment plans according to available resources.
Recognising the emotional state is the first step in the recovery process. Inexperienced collectors get upset at dealing with negative emotions, especially when they feel unfairly targeted. More in control than the financially out of control accountholder, they will attempt to blame the accountholder: “You spent the money – you have to pay it back!” Blaming only reinforces negative feelings of guilt and shame. The emotionally intelligent collector identifies the accountholder's emotional state and acknowledges it as normal and appropriate for the situation.
By normalising the emotion the collector creates closure and signals that both parties can move to a rational resolution. The collector should say: "It is quite normal to be...........(name the emotional state) about not the situation." Don’t say: "I understand how you feel." Customers often resent this type of assumption as patronising. “I understand” is used so often nowadays that it is trite and as such no longer communicates empathy as intended. Normalising the emotion avoids marginalising the accountholder with guilt. Good collectors use emotional intelligence rather than emotional blackmail.
The assumption that bad things happen to good people allows the collector to balance facts and feelings. The best collectors are firm, realistic, fair and tuned into both facts and feelings.
After the emotion has been normalised, the cause of indebtness should be identified so that an appropriate recovery strategy can be put into place. Generally, there are six causes of terminal indebtness:
Imprudence - who have no money put away for a rainy day and live financially one day at a time
Naivety - who are ignorant of the consequences of too much debt
Dumb luck - for whom, despite adequate planning, some catastrophic life event caused financial collapse
Recklessness - who spends beyond his or her means
Unethical - who have no intention to repay
Accidental - the high-risk customer to whom a card was issued to by accident.
Collection methods for each include: credit counseling for the naive and imprudent; closing the account and taking legal action with the reckless or unethical spender; and a combination of both for the high-risk customer. A compassionate and educational approach is appropriate for the victim of fortune.
The roadmap to better collecting:
Identify the emotional state
Normalise negative feelings
Identify the cause of indebtness
Adopt an appropriate collection strategy
Barry Leckenby is a Training and Quality Analyst with Australia’s third largest bank, the ANZ.
Source: Barry Leckenby, ANZ
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