Help Your Customers With Past Due Account Pay This Year!
It is a new year and with the new year comes the 2008 tax refund season. Did you know that 58 percent of all tax refunds are used to pay off debts. The new year is here and we want to encourage you to place all of your accounts that went delinquent in 2007. We will notify your customers that they have a past due account and encourage them to use their tax refund to pay it off. Do not miss this once a year opportunity to get your customers to clear up last yeas past due obligations.

We have launched a new website that will allow you to place your accounts online 24/7. It has never been easier to place accounts with SWR. Please contact Steven Dietz if you would like to receive your Username and Password for the new website. You can also request your Username and Password by visiting the website at www.swrecovery.com.

Personnel Costs Dominate Collection Agency Budgets
Published: January 18, 2008
People, postage and phones: They're often referred to as the "three Ps" that dominate the bottom line at companies throughout the credit and collection industry.

But it's the "people" costs in particular-those for labor, employee benefits and payroll taxes-that account for nearly half of an agency's gross annual revenue, according to the recently released 2008 Agency Benchmarking Survey by ACA International.

Nationally, an average of 40 percent of agency gross revenue went to employee compensation in the form of salaries, wages, bonuses and commissions, making it the single largest expense line for the typical collection agency. Just below 5 percent went to payroll taxes and another 2 percentage points covered employee training, retirement plans and other company-sponsored benefit plans.

Health insurance premiums continue to rise much faster than the rate of overall inflation and represent a major concern for collection agencies and small businesses. Company-sponsored health insurance expenses averaged 3 percent of agency revenue last year, surpassing even the costs for telephone service at the typical agency.

The periodic benchmarking study conducted by ACA surveys the association's U.S. collection agency members to help industry professionals gauge performance, compare costs and improve the efficiency of their businesses. The 2008 report features data collected from 214 ACA members for the 12 months ending Sept. 30, 2007. Most information is broken out by agency size to allow more meaningful comparisons among peer groups.

In addition to revenue and expense statistics, the study includes industry benchmarks for liquidation percentage, average account balance, revenue per collector, cost per account, best times/days to call and number of accounts in collector queue.

Credit Crisis Has Little Effect on Liquidation Rates for Healthcare Paper
Published: January 18, 2008
The recent credit and housing crisis has had only a mild affect on collection/liquidation rates for debt buyers, according to a survey by Milestone Advisors, a merger and acquisition advisory firm and information source specializing in the ARM sector.

While 50 percent of the debt buyers and contingency collectors surveyed did not experience any negative impact, the other 50 percent reported experiencing some degree of impact as a result of the current credit/housing fallout. Of those affected, debt buyers reported experiencing only a mild reduction in liquidations, while contingency collectors' responses were more evenly distributed, with a moderate impact accounting for the highest number of positive responses (30 percent). One possible explanation for this difference is that, in selecting the debt they purchase, debt buyers have chosen paper that is more likely to resist the current economic situation.

Credit card liquidation rates were markedly affected by the credit crisis, as 72 percent of firms collecting on this paper reported an impact. Further, an astounding 43 percent sustained a moderate or significant impact. The credit crisis seems to have had a lesser effect to date on liquidation rates on healthcare paper, with 75 percent of the firms reporting no impact. When compared to the high impact reported among credit card collectors, this is perhaps an indication of debtors placing a higher priority on their medical debt.

ACA's Second Win for 2008!
One weekend after achieving success over how debt collectors can contact consumers via their wireless number, ACA has more great news for the credit and collection industry, this time in regards to attempting to collect a debt that has been discharged in bankruptcy. In a case decided by the Northern District of Illinois, the court held attempting to collect a debt that has been discharged in bankruptcy is not a per se violation of the Fair Debt Collection Practices Act (FDCPA).

In this long awaited decision, the plaintiff owed a debt to a telephone service company. The debt was purchased by a third party who hired the defendant to collect on the account. The plaintiff later filed for bankruptcy and included the debt in the bankruptcy proceeding. The original creditor received notice of the bankruptcy and the debt was ultimately discharged. The defendant, however, sent the plaintiff a collection letter approximately eight months later in an attempt to collect the discharged debt. The plaintiff's attorney subsequently informed the defendant of the status of the debt, and the defendant immediately ceased collection efforts.

The plaintiff filed suit alleging the debt collector's attempt to collect the debt violated § 807 of the FDCPA [which prohibits false or misleading representations] by sending the plaintiff a collection notice when in fact the debt had been discharged in bankruptcy.

After being appealed twice to the U.S. Court of Appeals of the Seventh Circuit, the case was remanded back to district court to determine whether the collection letter to the plaintiff "implied to a reasonably objective, but unsophisticated consumer that the debt discharged in bankruptcy was still payable."

In April 2007, the court ruled in favor of the defendant, holding the plaintiff was not misled because he could not show the collection letter implied "to a reasonably objective, but unsophisticated consumer that the debt discharged in bankruptcy was still payable." The court concluded that while the plaintiff believed the defendant was accusing him of owing the debt, he knew the debt had been discharged in bankruptcy and knew he no longer owed the debt. On January 7, the plantiff voluntarily dismissed his appeal of the court's ruling.

This case stands for the proposition that sending a collection letter in the attempt to collect a debt that has been discharged in bankruptcy is not a per se violation of § 807 of the FDCPA. Rather, the plaintiff must first prove the attempt to collect the discharged debt would be misleading to the objective, least sophisticated consumer before a § 807 violation can be found. Equally important to any defense to an allegation that a debt collector violated the FDCPA for communicating with a consumer after a bankruptcy filing is evidence of the policies and procedures the debt collector has in place to prevent such a violation from occurring.

This success could not have been accomplished without the skillful defense presented by MAP attorney, David M. Schultz, Esq. of Hinshaw & Culbertson, LLP, counsel for the defendant in this matter; the leadership, resources and support of NCO Group, a nationwide leader in the credit and collection industry and ACA member; and the vision and commitment of the ACA Legal Defense Fund. The ACA Legal Defense Fund Committee recognized the industry-wide significance of this case at its inception and provided the necessary financial support to continue this case through the legal process to a favorable end. This cause required assistance from all sources, and ACA thanks the involved parties for their dedication and persistence in achieving another victory for our industry!

This favorable decision is an excellent example of how ACA brings members of the credit and collection industry together to fight a worthy cause. This case was initially filed in August of 2001, and enjoyed a long journey through the legal system before its resolution yesterday. It only shows that being patient and persistent to accomplish an objective is the most effective way to get positive results.

ACA Wins Cell Phone Issue!
After years of hard work, ACA has achieved success for the credit and collection industry in regards to contacting consumers via their wireless telephone number. Today, the Federal Communications Commission (FCC) issued an order ruling that autodialed and prerecorded message calls to wireless numbers provided by the called party in connection with an existing debt are permissible.

Prior to today, the Telephone Consumer Protection Act (TCPA) generally prohibited autodialed and prerecorded message calls to wireless telephone numbers unless there was prior consent from the called party.

In October of 2005, ACA submitted a petition to the FCC requesting clarification that the prohibition against autodialed or prerecorded message calls to wireless telephone numbers under the TCPA does not apply to creditors and debt collectors when initiating such calls to wireless telephone numbers to recover payment for good and services purchased by consumers. In particular, ACA argued the TCPA was designed to reduce telemarketing efforts to wireless telephone numbers, not debt collection efforts by creditors and their collection agencies.

Today, the FCC responded favorably to ACA's request, concluding that if a person provides his or her wireless number to a creditor, and the number was provided "during the transaction that resulted in the debt owed," then autodialed and prerecorded message calls to the provided wireless telephone number are permissible under the TCPA. This ruling clarifies that a person voluntarily giving his or her wireless telephone number as a means to be contacted constitutes prior consent under the TCPA.