Collector - March 2020 - 33

Smaller organizations rarely use any type of scoring
and analytics, even though manual processes are
time-consuming and can lead to highly subjective
decisions. Those that do employ these tools may
find their results poisoned by bad data.

hit a short-term financial hardship, and
efforts to work out a mutually beneficial
payment plan can go a long way toward
building a long-lasting relationship. But
how do you decide when to mitigate
versus litigate?
To start, you need solid insight into
a consumer's ability to repay, including
data on current assets, current liabilities
and more. Having information on liens,
judgments, bankruptcies and property
data, to name a few, can really improve
your ability to make better decisions in the
course of your collections process.
Collections scoring at this stage is often
subjective or based on non-ideal scoring
methods, like using credit-based scoring
versus scoring specific to involuntary
collections. These suboptimal scoring
methods can lead to regulatory penalties,
missed opportunities to collect or wasted
time and expense pursuing accounts that
are unlikely to pay.
How to mitigate: Rather than relying
on credit-based scoring, look for scoring
models that are built for involuntary
collection. Seeing things through this lens
helps clarify which accounts to hold on to
and mitigate. These solutions should also
provide profitability calculations-a key
facet of the evaluation process.

LITIGATION STRATEGY
Many organizations outsource litigation
to a third party; however, those that do
manage litigation directly often face
many challenges.

COLLECTOR 03.20

We know that regulations heavily favor
the consumer and most organizations
have put even more conservative in-house
policies in place to stay on the right side
of regulators. It can be difficult to know
when to cut your losses, especially when
you need to spend additional resources to
perform a cost-benefit analysis to inform
your litigation strategy. Litigation is
situational and specific to each consumer.
Using a third-party litigation firm is not
necessarily easier. Attorneys and collectors
do not always agree on the best course of
action. This could create delays and may
yield a reduced judgment or, even worse, a
non-performing judgment.
Each step in the debt collection
workflow has pain points, but those pain
points do not need to be debilitating.
While regulations like the Telephone
Consumer Protection Act and those related
to the Consumer Financial Protection
Bureau can affect every step in the debt
collections process, there are cost-effective
data and technology resources in the
market that can not only mitigate that
impact, but also provide solid returns on
investment. Defining an efficient process
that includes using a unique identifier
for your individual customers, as well as
maximizing your in-house data assets, can
make a real difference for your business.
Sean Britt is the senior director of
product management for LexisNexis Risk
Solutions. He can be reached at sean.britt@
lexisnexisrisk.com.

1

Run routine data quality
checks and use strong
linking technology to
ensure your data is clean.

2

Scoring and analytics
tools can help
prioritize collection efforts,
but need scrubbed data to
be effective.

3

Rather than relying
on credit-based
scoring, look for scoring
models that are built for
involuntary collection.
33



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