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   ARTICLE   |   From Scotsman Guide Residential Edition   |   July 2005

The lighter side of lending: Taking collections

Originators are never fully trained until they spend a little time on the other side of our business. In management-training programs, new hires would be sent to work in all departments to get the feel of a business. Although I worked in other departments, too, my old boss had me spend my first year in the Collections Department.

“I want you to understand the type of organism lenders deal with,” he said.

I learned plenty about human nature while working in Delinquent Accounts.

This was long before the Fair Debt Collection Practices Act passed. In fact, Congress cited some of the things I did as the very reason for the legislation. This law now forbids any lender from threatening or intimidating debtors or calling them during “Jeopardy.”

On my first day, I presented myself in a new, three-piece suit.

“Oh, yes, I’ve seen your name,” my new boss in collections said. “We have most of your loans in here.”

A bad start.

“The first thing I want you to do is go home and change,” he said, which puzzled me. “People prefer to borrow from those who are dressed up. But they won’t give money to someone who looks like he doesn’t need it. Wear dungarees.”

I also learned that nothing inspires the creative mind more than having to explain why you can’t make a payment. A favorite technique involves guilt reversal.

“Not only did my dog eat the check,” my first customer said to me, “but he also ate the entire checkbook, which caused severe intestinal swelling. If I hadn’t paid the vet instead of you, my dog would have died.

“Would you have wanted to cause the painful death of an animal?” he asked.

Anyone who has raised children will recognize that ploy immediately.

Some people combine guilt with any handy medical contagion. One lady told me, “I’ll make my payments when I can leave the house. My doctor told me not to leave the house. Don’t even come here. Who knows what I’ve got.”

I called that the unknown microbe.

“I’m under the care of a specialist,” another man said to me. “The reason I don’t mail anything to you is that my disease can be transmitted through the mail. You wouldn’t want to touch anything I’ve touched.”

I’d like to mail his disease to a few people I know.

Then there are the accident-prone. It’s not that I’m totally insensitive to adversity. We all have our share of accidents.

But one lady explained her 90-day delinquency with a chronicle that began with “a serious fall while skiing.”

“Then in the hospital, I fell and broke a kneecap,” she said. “Then I took a cab home, and we got into an accident that punctured my liver. Be considerate. These lawsuits will take time.”

I contacted her lawyer to verify all this bad luck.

“I’m afraid it will be some time before my client can pay you,” he said. “She fell down the stairway on her last visit to me.”

We wrote “lucky” on her file.

Some people see the government at the center of every dilemma.

“Just a minute, I want to give you a phone number to call about my house payment,” said one man, who gave me the number with an explanation.

“Talk with my congressman and tell him to send you the money,” the man said. “If he hadn’t voted for the budget cuts, I’d still be employed.”

Engineers approach delinquency in a predictable manner. They design a repayment plan that is compatible with their changing economic circumstances.

One engineer suggested this: “Since you folks think that no more than 28 percent of your pay should go toward housing expenses, I’ll send you 28 percent of my unemployment check.”

We took it. Our underwriter would have approved.

There are times when you wonder how some of your customers were approved for a loan in the first place.

“I don’t handle money well,” a timid man said. “When is the last time I paid you?”

I told him it was 60 days ago.

“Well, you’ll hear from me in another 60 days,” he said, and he promptly hung up.

One delinquent borrower said to me: “When I got this loan, I was told you wouldn’t accept income made illegally. But I’ll bet you will now.”

He was right.

That’s lending, brother.


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