Managing Delinquency - Illinois Credit Union League

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Managing Delinquency
When an account becomes delinquent you are immediately in a race against time. With
each passing day your likelihood in collecting diminishes. Keep in mind that every dollar
collected on a bad debt goes directly toward improving your bottom line, and, by that
same logic, every dollar uncollected is a strike against your credit union.
Follow these easy steps the moment an account is past due:

Don’t put it off, even if you believe the payment is in the mail. Always send
regular reminders.

Create and stick to an aggressive collection plan. Establish a system of regular
letters, notices and phone calls, beginning at 10 days past due and planned
intervals thereafter until the payment is made. For example, start with a series of
friendly reminders, followed by canned letters increasing in urgency. Make
phone calls. Persistence pays off.

Unforeseen financial difficulties do arise and working with your members to work
out a sensible payment plan may result in regular payments. Be flexible, but fair
and be specific about the steps you will take if they do not follow the revised
payment schedule.

Make sure your collection policy includes the procedure if your efforts to collect
fail. Consider hiring a collection agency or collection attorney.
http://www.lsc.net/services/collections

Always charge late fees.

Include self-addressed envelopes in order to make it easier for the member to
mail the payment.

Include the phrase Address Correction Requested on envelopes so the post
office will provide you with a forwarding address.
Remember
 Do not call before 8 am or after 9 pm or at inconvenient places unless the
member gives you permission.
 Collection letters should include the date, name/address, description of the loan
and the amount due.
 Do not use threats of violence.
 Do not publish a list (except to a credit bureau).
 Do not use obscene language or telephone repeatedly.
 Do not make false or misleading statements.
 If a member asks you to stop contacting him in writing, you must adhere to the
request. It does not make the debt go away; simply pursue a different collection
method.
1
First late notice
Date goes here
Name
Street
City, State Zip
Dear Name:
As of the above date we have not received payment in full on your account with us. If payment
has been made, or check is in the mail, please accept our thanks. If payment has not been made,
payment is necessary to bring your account current in the amount of $_______________.
If you feel this notice is in error, please contact the credit union. Otherwise, please mail your
check today in the enclosed envelope.
Thank you for your prompt attention.
Sincerely,
Name
Title
2
Second late notice
Date goes here
Name
Street
City, State Zip
Dear Name:
Your account is now _____ days past due and requires your immediate attention. Please remit
your payment in the amount of $________________ to avoid additional finance charges and
further collection action.
If you have questions related to your credit union account, please contact our office at
________________. Otherwise, we will expect payment promptly.
Thank you for your attention to this matter.
Sincerely,
Name
Title
3
Third late notice
Date goes here
Name
Street
City, State Zip
Dear Name:
Once again we call to your attention your account, which has a long overdue balance of
$_____________________.
While we have received no reply to our previous notices, we are still assuming that you are
interested in the settlement of your account. If you are unable to send your payment by return
mail, it will be to your advantage to write or call us immediately to make arrangements necessary
to clear this balance, in order that we will not be forced to suspend further credit and take legal
steps to effect a collection.
Sincerely,
Name
Title
4
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