Are You Calling a Deceased Person for Payment?

Consider the following situation: An auto loan falls into delinquency. The lender moves the account into collections. A debt collector calls the borrower, only to learn from a family member that the borrower died last month. The collector is forced to react to the news and initiate an awkward conversation about how the family intends to pay for the vehicle.

It is a nightmare scenario, and one that can easily be avoided. After all, lenders have a process for managing accounts that go delinquent. Why not have a process for identifying deceased borrowers before their accounts fall behind? Such a plan could avoid the costs associated with delinquency and collections while providing top-of-the-line customer care.

And the timing couldn’t be more appropriate. A record number of Americans — 43% of adults in the United States — have auto loan debt. Unpleasant as it may be, it is inevitable that a portion of those borrowers will pass away before their lease is up or their loan paid off. The best course of action is to be ready.

Shifting from Reactive to Proactive

Having a plan for managing deceased borrowers is about prioritizing efficiency and customer service. There is no set blueprint. Processes will naturally vary based on internal infrastructure and resources, as well as state regulations. But these three elements should be part of every plan:

  • Identify Deceased Borrowers

The first step is to implement a program that monitors for deceased account holders. The good news is that this can be automated, making it easy to improve customer care and internal operations. Third-party vendors can run a lender-provided list of borrowers through a database daily and flag those who are deceased. The vendors can even provide ancillary information, such as the death certificate number. The lender can then route these accounts to an outreach specialist.

  • Initiate Outreach

The key term here is “outreach.” The call should begin with a message of condolence. At this point, the purpose is not about collecting on a debt — after all, the account is not delinquent — but about exploring options. Scripts can help guide these sensitive conversations. Having a representative who is trained in — or at least familiar with — probate laws can further improve the outcome. That way, the representative will be better able to anticipate and answer the family’s or estate holder’s questions as they work toward a resolution.

  • Keep Records in Order

Lenders can improve the overall experience by ensuring the titles and liens for the vehicles they finance are properly filed. This is a step they should take as a matter of everyday business. But when dealing with the confusion that can follow as survivors sort through the probate process, lenders will be in a better position if they themselves do not have to track down a missing title.

Changing the Conversation from Debt Collections to Customer Care

With a plan in place, what would have been a collections call can instead become a customer service call.

From the lender’s perspective, it is much more efficient to manage, rather than react to, the situation. It reduces internal handling times and limits the losses associated with accounts falling into delinquency.

From the family’s perspective, it can ease a sorrowful transition. In this scenario, the lender becomes not a faceless debt collector but a trusted advisor during a difficult time.

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