In a perfect world, borrowers would always repay their debts on time and in full. But the reality is that life is not always perfect and sometimes people do default on their loans. When this happens, it's important for the lender to take swift action to protect their interests. After all, bad debt can be a major issue for lenders; the biggest obvious issue is that it can be difficult to get the money back that is owed. However, armed with a dynamic debt collection software like ours here at Nortridge, lenders can harness the power of default management and much more easily collect on bad debt. Let's dig a little deeper into this together so you can get a better understanding of how it all works.
What is a Bad Debt?
Bad debt is any type of debt that a borrower cannot afford to pay back – or even simply just chooses not to. This can include anything from large commercial purchases and credit cards to student loans, car loans and even mortgages. If you find one of your borrowers is struggling to make their monthly payments, you may be dealing with a client who has bad debt. No one wants to have bad debt, but unfortunately, it can happen to the best of us. The good news is that our integrated Nortridge Loan Software can give your office a major boost by making it easier to spot these issues, go after them, and therefore help you to dramatically improve collection rates.
How does the Nortridge Loan System Increase Collection Rates?
Organization and a big picture view of your loan portfolio is the best way to keep an eye on things and increase collection rates. Our fully integrated collections module is equipped with a dashboard that allows you to see all of the pertinent information about a delinquent loan or borrower on one screen. This screen can be customized to display the data fields important to your specific collection activities including how many times that borrower has had a non-sufficient funds payment, payments past due 10, 30 60, 90 and 120 + days, and the number of kept and broken promises. A series of tabs along the bottom of the screen allow the user to view detailed information including payments due, payment history, collateral and important statistics. This is the foundation of any lender operation.
What One of Our Clients Has to Say:
"Outstanding. I was able to bring up one seat when my business was small, and grow that easily and cost-effectively. The system is highly stable, well supported, and easy to integrate with, and easy for collectors to use."
What are some of the challenges involved in collecting on bad debt?
When it comes to collecting on bad debt, lenders can face a number of roadblocks. We want to bring these issues to light and share how our debt collection software comes in to save the day every time.
The debtor may have filed for bankruptcy.
Once a debt has been discharged through bankruptcy, debt collectors can no longer attempt to collect on that debt. So, if one of your borrowers has filed for bankruptcy, you'll need to know about it, and the Nortridge debt management software has just the solution.
Offering you the best-in-class bankruptcy monitoring and case management, our BankruptcyWatch integration provides a direct connection with the court system, PACER. Through this portal, Nortridge users get the most up-to-date information, saving countless hours sifting through multiple court websites. These get automatically updated to the NLS database, which allows you to know when a loan is in bankruptcy proceedings, enabling you to take appropriate actions, like stopping collection activities.
The debtor may not have the money to pay.
Distressed loans are a fickle thing. They are loan situations in which the borrower does not have the financial capacity to pay according to its terms, as determined by the qualified lender. If you are a lender trying to collect a debt, it makes it difficult to get the money you're owed if the debtor can't or won't pay. Distressed lending is mostly an uphill battle and, eventually, in some cases, the creditor may be forced to write off the debt as uncollectible. You want to spot these cases asap so you don't waste time and resources on beating a dead horse.
The debtor may be difficult to track down.
Collecting a debt can also be a challenge if the debtor is difficult to track down. If the debtor is no longer living at the address on file, or has moved out of state, it may be hard to locate them and collect what is owed. Our debt management software offers a function that helps in the tracking down of debtors. Once you locate them you can negotiate repayment agreements and increase your chances of collecting what is owed to you.
The debtor may dispute the debt.
If a debtor disputes a debt, it may be difficult for the lender to collect the amount owed. It is important to document any attempts to collect the debt and keep records of all communication between the lender and the debtor which is exactly what one section of our debt management platform offers. By keeping good records, you will have evidence in case legal action becomes necessary. Lenders should also be aware of their state's collection laws and regulations.
The creditor may have trouble getting a judgment against the debtor.
If you are a lender and want to get a judgment against the debtor, you may have trouble doing so. The debtor may have moved, or they may have hidden their assets. In some cases, the debtor may even be in bankruptcy which is where our BankruptcyWatch integration comes perfectly into play. You will need to take all of these things into account before trying to get a judgment against the debtor.
There may be other creditors competing for the same assets.
When a lender is considering making a loan, there are obviously many things to take into account. Among these are the other creditors who may be competing for the same assets. If the company is in financial trouble and there are other creditors bidding for its assets, it's important for the lender to know how much money it can expect to receive if it makes the loan. Understanding how these situations play out can help inform a lending decision and protect the lender's interests. Our Nortridge debt collection management software gives you an eagle-eye view of all of these details.
Don't Let Collection Opportunities Slip Through The Cracks
Some debts, unfortunately, just won't ever see repayment, but the ones that can still be collected on should never be let out of sight. Our Nortridge Loan Software makes default management easy. If quick access to payment histories and collateral information and the ability to create automated collection processing campaigns sound like some of the things you need more of, check out our pricing and contact our team right away so you can schedule a demonstration. We will show you the depth and power of our loan servicing Nortridge Software.