The benefits of selling bankrupt members’ loans
These collections efforts are more intricate and costly than those done for normal delinquencies.
In credit union lending, some unfortunate costs of doing business include delinquencies and reduced collections due to member bankruptcies. With about 750,000-800,000 people filing for bankruptcy every year in the U.S., your credit union needs a plan for how to deal with this inevitability.
When trying to collect from members who have filed for bankruptcy, it’s important to remember that bankruptcy is a legal proceeding. Dealing with members in bankruptcy means your CU is subject to rules of the courts and can’t make traditional collections calls or proceed in the same manner as when pursuing normal delinquencies.
If your CU doesn’t employ an expert in the legal restrictions of bankruptcy proceedings (and often even if you do!), you may want to consider selling the loans of members in bankruptcy to a firm that knows how to navigate the court system and maximize recovery while minimizing costs and risk. Here are some of the benefits you could experience from selling these kinds of loans:
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