When the Bankruptcy Tsunami Hits, Will Your Collection Agency Survive?

The 2008 financial crisis led to a wave of bankruptcies as businesses and consumers struggled to stay afloat in a worsening economy. At the tail end of the Great Recession in 2010, almost 1.6 million bankruptcy petitions were filed, of which 1.53 million were consumer cases.

Could the current economy, with its looming threat of recession, outpace the bankruptcy volume seen in 2010?

Economists looking at the spike in unemployment levels say it is inevitable. Consumers are under tremendous financial stress, with no end in sight. They’ll soon burn through their savings and stimulus checks. Unemployment benefits will run out.

Anyone who was struggling to make ends meet before the nationwide COVID-19 shutdown is likely to be pushed over the edge. Once consumers get too far behind on debt, they’ll see bankruptcy as their only option for a post-crisis reset.

Rising Household Debt and Financial Hardship: An Explosive Combination

In 2019, consumers nationwide filed 752,160 cases of personal bankruptcy in the United States. This is the continuation of a national trend of declining bankruptcy filings since 2011.

But while bankruptcy filings have steadily dropped, reaching their lowest levels in years during the shutdown period, household debt has climbed. With the unique economic challenges of 2020 compounding families’ financial woes, the current lull in bankruptcy filings is likely the calm before the storm.

For collection agencies, a surge in bankruptcies could double or triple their workload. They could receive mail related to as many as 40,000+ cases per day! Agencies that rely on manual processes will struggle to keep up.

Fortunately, there is a better way.

Prepare Now by Simplifying Bankruptcy Case Management

The right solutions can help businesses automate their bankruptcy case management workflow. Solutions that provide continuous monitoring can help collection agencies keep track of initial bankruptcy notifications, closures, dismissals, discharges, conversions, and everything in between.

With daily updates for new filings or changes in status, collection agencies can:

• Maximize efficiency through automation and eliminate manual data entry
• Limit their legal exposure to stay violations
• Track activity after the initial filing
• Receive full notification, even if their client isn’t listed on the creditor’s matrix
• Save money on employee costs—with no additional manpower needed
• Learn of dismissals and move the accounts back into collection queues
• Receive notification of discharge, reinstated, and closed and converted cases

No more waiting 7–10 days to receive notification by mail and risk violating a stay order; a solution that offers immediate automated notifications allows you to be proactive.

5 Qualities to Look for in a Provider

As the bankruptcy numbers begin to swell, automation becomes essential to ensuring your agency stays on top of cases. The right software and solution can make an immense difference in your agency’s productivity and effectiveness.

Look for a solution provider with the following qualities:

1. Bankruptcy industry expertise and experience
2. Vast data resources dating back 10+ years
3. Big data technology that speeds processing
4. The ability to leverage millions of bankruptcy records
5. Linking and analytics capabilities—the engine behind data analysis

The right automation solution, integrated, implemented, and supported by the right resource, can help you minimize operational expenses, maintain compliance, and optimize your portfolio management.

Learn more at our upcoming webinar on Tuesday, July 28, 2020 at 2:00 p.m. ET, “How to survive the coming tsunami of bankruptcies: What every collection agency needs to do NOW to prepare.” Click here to register.

¹ https://www.marketwatch.com/story/bankruptcy-filings-are-at-a-10-year-low-but-thats-not-necessarily-good-news-2019-01-07

² https://www.statista.com/statistics/817911/number-of-non-business-bankruptcies-in-the-united-states

Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies.

© 2021 Ontario Systems, LLC. All rights reserved. Information contained in this document is subject to change. Reproduction of this publication is not permitted without the express permission of Ontario Systems, LLC.