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Shelter in the Storm: Debt Collection with Compassion

5/5/2021

In the current economic landscape, debt collectors must be equipped with the soft skills necessary to assist financially distressed consumers and help them find a shelter in the storm.

Shelter in the Storm: Debt Collection with Compassion

Helping Financially Stressed Consumers

Did you know that more than 50 percent of U.S. consumers have lost income because of the COVID-19 pandemic? Folks from all walks of life are struggling to pay their monthly bills.

In this economic landscape, debt collectors must be equipped with the soft skills necessary to assist financially distressed consumers and help them find a shelter in the storm.

This process can be broken down into three steps:

Listening empathetically to the consumer.
Working with the consumer to develop a payment plan.
Reminding the consumer of the payment plan.

#1. “I hear you.”

Patients and other consumers want to feel heard, understood and respected. And yet they may be reluctant to open up to a virtual stranger about a topic that’s so private—their finances.

This is where empathetic listening is so important. Listening empathetically allows you to identify the source of their financial issues, without passing any judgment.

Use empathy statements, such as:

“I’m so sorry to hear that…”
“I can understand how frustrating it is when…”
“I realize how complicated it is to…”
“I imagine how upsetting it is to…”

It also doesn’t hurt to remind them that they’re far from alone, especially during these uncertain economic times. Even before the pandemic, 78% of American workers were struggling with financial stress.

Oftentimes patients/consumers can’t speak with family members about their financial issues, as this would only cause them even more stress. Instead, they need an impartial but compassionate ear to provide outside support.

4 Tips for Empathetic Listening

Be nonjudgmental.
Give the consumer your undivided attention.
Listen to both facts and feelings.
Restate and paraphrase.

Source: Crisis Prevention Institute

Make sure your consumers feel safe to talk with you about these sensitive matters. Establishing trust should be a top priority.

#2. “I can help with that.”

Offering a no-interest payment plan should be the first step to alleviating the consumer’s financial stress. But that may be just the beginning.

Make sure the terms are flexible. For instance, with particularly high balances, be willing to extend out the payment period (say, from one to three years).

Use open-ended questions to keep the consumer involved in the plan development process: “I understand that you can’t afford to pay $100 per month right now. How much do you think you can afford at this time?”

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Be willing to accommodate unpredictable income fluctuations. If you’re empowered to do so, you may even consider deferring payments or negotiating a settlement.

Two Types of Empathy

Researchers often differentiate between cognitive empathy and affective empathy:

“Cognitive empathy,” refers to the ability to understand how a person feels and what he might be thinking.

“Affective empathy” (sometimes called “emotional empathy”) is the ability to share the feelings of another person. Some have described it as "your pain in my heart."

Cognitive empathy plays a huge role in effective debt collection. It makes the collector a better communicator, because it helps him relay information in a way that resonates with his consumers.

Offer multiple payment options to improve your chances of getting paid. With today’s technology, even elderly consumers and patients are using online portals to pay their bills, so be sure to make them available. You can also offer to set up automatic payments.

#3. “It’s time for your monthly payment.”

Once you and your consumers have created a viable payment plan, it’s important to help them stay on track.

Automatic reminders (such as emails, texts or – if they prefer – phone calls) will help your patients/consumers keep their debt repayment goals at top of mind.

Payment reminders are often scheduled shortly before the due date (e.g. two days), shortly after the due date, and then regularly after that (such as once a week).

Be sure to include all your contact information in your reminders, so consumers can get ahold of you if necessary.

A series of reminders usually works quite well. But they must continue to be helpful and encourage a connected relationship.

If you’ve sent several reminders with no response, it may be time to renegotiate the payment plan terms.

Make sure that your communications invite the consumer to have a conversation with you. Ask the patient/consumer to contact you to discuss his overdue payment and be available to take his call.