Credit unions would see a smaller percentage of loans fall into significant delinquency if they reached out to borrowers earlier, according to a firm which offers credit unions collection assistance.

CU Recovery and the Loan Service Center says it has research which indicates that something as small as a friendly reminder to a borrower in the first few days after a payment is late can be enough to prevent the loan from becoming seriously delinquent.

“It's a way of doing collections which cuts against the traditional norm,” explained Dorothy Drake, marketing specialist for the organization.

“Instead of trying to collect on loans that are already delinquent, the goal is to step in before they become delinquent,” Drake said.

Drake explained that the firm, which has claimed roughly 2,400 credit union clients at different times, had decided to offer the greater degree of collections service, which it dubbed Payment Reminder, after it became clear that many credit unions lack the staff to do it on their own. 

In addition, the service works well on helping to keep overdrawn checking accounts from getting out of hand, Drake added.

“[The new service] started some time ago with the inception of overdraft share protection loans and credit union collection departments accepting an added collection responsibility previously handled by accounting departments,” Drake explained.

“Because of the unique regulations governing overdraft share protection loans, collection departments found that they did not have the necessary systems in place, or the manpower to churn through the contact with members that needed to be made within the narrow window before charge-off. Needing to make 'resource vs. return' decisions, collection departments felt that they were not giving this debt repayment area the attention that it deserved,” Drake said.