Expert Interview Series: Michelle Dunn on Credit and Collections

Michelle Dunn is a 30-year debt collection and credit industry expert. She is also the author of more than 24 books on the topic and offers consulting on the debt collection and credit industry.

In this interview, Michelle discusses what individuals and businesses can do to make managing debt easier. Read on:

What are the most common causes for individuals or businesses to fall behind on their bills?

The most common reason a small business falls behind on bills is that they do not have a credit policy for their own customers. Without this policy, they do not have control of their cash flow. When your customers pay you late you may not be able to pay your own bills on time.

For individuals or businesses that are struggling financially, what can they do to prevent their overdue bills from being turned over to collections?

The most important thing they can do is to keep the lines of communication open. If the creditor knows why you are late or that you are trying they will work with you. When there is no communication the creditor does not know your intention and feels as though you may not pay. That’s when they turn your account over to collections.

What are the biggest mistakes you see individuals or businesses making in managing their debt?

Ignoring the debt until it is too late is the biggest mistake. Take action immediately. If you are the debtor, contact the creditor and just let them know what is going on and what your plan is to pay the bill. If you are the creditor, call the customer as soon as they become past due and find out why they did not pay and make arrangements for repayment.

Where have you found the insurance industry and debt collection intersect?

Mostly with medical debt – and many times the collector ends up acting as a mediator who can still obtain payment or part of the payment from the insurance company.

What types of insurance should individuals and businesses consider getting in order to provide a cushion for emergency situations?

All the insurance they can! It’s similar to protecting your personal assets: You want to protect your business.

What resources are available to individuals and businesses who need help digging out of debt?

Credit counseling services (non-profit) are normally your best bet. They are not out to make a bunch of money from you; they are there to help you. It is very important to do your due diligence when choosing a company to help you dig out of debt because they are not all reputable companies. Check references and make sure they are legitimate.

What do we need to know about protecting ourselves from predatory businesses that hope to profit off people struggling financially?

Use your common sense: If someone calls you about debts you do not know about, hang up or ask for verification. The call could be a scam. Ask a family member to help you organize your bills and finances, and don’t pay anything that is not yours or that a creditor cannot prove is yours.

What are the biggest headlines or trends you’re following today in the debt collection industry?

The new proposed laws being considered by the Consumer Federal Protection Bureau (CFPB). The CFPB is proposing new laws to replace the Fair Debt Collection Practices Act (FDCPA), which are the laws that third-party collectors have followed since the 1970s! Looking forward, the CFPB will be suggesting and proposing new laws to help protect consumers who are in debt. The CFPB will also help collectors collect from consumers more effectively, especially with the use of new technology.

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The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.

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