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Chargeoff Recovery

Intrinsically, the business of lending money involves risk. This is true, regardless of what type of financial institution is in this type of business.

Most loan officers, if asked about a loan they processed that has gone into delinquency, will likely state that "it was a good loan when it went on the books." This is true in the loan officer’s eyes, regardless of whether the member made every payment as agreed or the collateral was repossessed. If the loan officer in question did not believe the loan had good probability of repayment, they would not have loaned the funds in the first place.

The fact of the matter is when the member actually takes out the loan; the vast majority intends to repay the debt. Unfortunately, even the best laid plans may be derailed when "life happens." Perhaps the member loses their job, perhaps they, or someone they love becomes chronically ill, there may be a relationship change; a death, a divorce or something else catastrophic occurs that prevents the member from paying as agreed. If this inability to pay persists for an extended period of time, the unpaid balance of the outstanding loan may result in a loss to the credit union. As a "not for profit" lender, this is a particularly difficult decision because the dollars the institution charges off belongs to the members themselves.

The good news is that a large portion of the money a credit union charges off is recoverable. As time goes by, circumstances that initially prevented the member from repaying their debt tend to be resolved and people re-establish their lives and their ability to settle their debts. The bad news is that people are inherently creatures of habit; once enough time passes, they are out of the habit of paying the credit union. They are not likely to revive the repayment process without prompting; in fact, they may have forgotten that they owe the credit union anything at all.

The most obvious solution is to have a procedure in place to resurrect the payment process, but most credit unions do not have the time or the human resources on hand in order to pursue these potentially collectible funds.

Blake Credit Union Services has the resources and the experience to identify which members in the credit union’s delinquency portfolio have charged off loans that now have the ability to reimburse their outstanding debt. Furthermore, BCUS has the proficiency to maximize the recovery of the monies owed to the credit union by these members.

Delinquent members have already created expenditures to the credit union; BCUS seeks to mitigate any additional losses, which is why the BCUS Chargeoff Recovery Service is motivated by the end result. This is translated into no upfront costs to the credit union until funds are actually recovered. How the BCUS recovery process helps the credit union:

  • All payments mailed directly to credit union by the member
  • Monthly updates from BCUS to the credit union client on all accounts
  • No cost to the credit union until funds are recovered
  • No additional work for credit union employees; BCUS staff set up and maintain the collection files
  • Fully trained, onsite, experienced support staff to assist in charge off recoveries
  • Credit union maintains complete control of accounts at all times

For more information, please contact us at (281) 362-2752.