Reasons for Non-Payment of Debt

​There are many reasons consumers may not be willing or able to pay their bills. These reasons primarily fall into four categories: Circumstantial, Emotional, Intellectual and Criminal.

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Reasons for Non-Payment of Debt

Why Do Consumers Fail to
Pay Their Bills?

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There are many reasons patients and other consumers may not be willing or able to pay their bills. These reasons primarily fall into four categories: Circumstantial, Emotional, Intellectual and Criminal.
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Let’s take a look at each.

Circumstantial

The vast majority of consumers with overdue accounts fall into this category. Patients may want to pay their medical bills, for instance, but they’ve fallen on hard times. The COVID-19 pandemic and resulting economic shutdown has taken its toll on consumers in all walks of life. Unemployment is rampant, making it more important than ever that collectors work with consumers to resolve their debt issues.​

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Empathy goes a long way toward connecting with these consumers. Effective medical debt collectors must first listen to the patient’s story and gather as much information as possible. Then – together – they can devise a payment plan.
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It often helps to remind these consumers that their current financial situation is temporary. 

​Emotional

Consumers who are ruled by their emotions may blame their debt on other people. They often fail to take ownership for the situation in which they find themselves. They may deny the debt or become angry about it.

Debt Denial
Symptoms of debt denial include:

• Underestimating how much is owed.
• Refusing to answer the phone whenever a collection agency is calling.
• Leaving bills unopened or stuffing them in a drawer.

Unfortunately, such behavior just leads to more debt when interest charges and late fees begin to accrue. Rationalizing mistakes is one way to protect the ego. But sooner or later, reality always sets in.

Debt-Anger Syndrome
Instead of panicking or denying, these consumers get mad.
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They’re mad at creditors who continually send them bills. They’re mad at the postal carrier for delivering the bills. They’re mad at their employers for not paying them more. They’re mad at their spouses, mad at their kids and mad at themselves. They’re basically mad at life.

These consumers need to know that they can start feeling better right away, once they have a plan to dig out of their financial hole.​

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​Intellectual

​Intellectual consumers are often disorganized. They may have a high education level, but little knowledge of finances. Their debts may seem trivial to them in the grand scheme of things. It often helps to show them why they owe the debt in the first place.
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These consumers can often be encouraged to resolve the account right away.

Criminal

There’s no set method for identifying debtors who have no intention of paying their debts. But the number of accounts and types of debts a consumer owes might provide a hint about a consumer’s intentions.
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For instance, substantial medical debt isn’t necessarily a red flag. Excessive credit card debt, on the other hand, might indicate a pattern. 

​Overcoming Objections​
There are steps that can be taken to overcome consumer objections to paying their bills. By putting the consumer at ease, reputable collectors can move quickly to resolving the overdue account.

​Professional collectors will:

• Validate the patient’s or consumer’s feelings.
  Whether the consumer is feeling anxious, angry, or hopeless, a reputable collector will listen and empathize. 
• Help the consumer to feel better about the situation.
  The patient’s financial hardship is almost always temporary; but they may need to be reminded of that. They also need to know that the creditor and collector are not the patient’s enemies, but rather his allies in working to resolve the debt. 

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• ​Let the consumer/patient know what can be done to help them.  
  A flexible, zero-percent interest payment plan should be central to possible solutions offered by the collector. In fact, findings reported in the fall 2017 issue of Journal of Health Care Finance indicate that such payment plans not only allow patients to pay their medical bills, they also result in public health benefits while contributing to the financial well-being of providers. 
  
  For example, patients with access to these payment plans were less likely to avoid medical care because of the cost. And they were also more able to pay for necessities like food or heat, as opposed to patients without access to affordable plans.​​​

If you’d like to offer alternative payment plans to your patients or customers, but are unsure where to start, the professionals at Credit Service Company can help. Contact us today!

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Sources:
Featured Image: Adobe, License Granted
PDC Flow
Journal of Health Care Finance
Debt.org