Editor's Note: For all related insideARM articles and other information, please check insideARM's COVID-19 Impact resources page.
Today, the North American Collection Agency Regulatory Association (NACARA) issued a message regarding the COVID-19 health crisis, which includes guidance for consumers, regulated entities, and regulators.
NACARA acknowledges the unprecedented situation caused by the pandemic, both for consumers and debt collectors alike.
[I]t is imperative that regulators be sensitive to the fact that collection agencies may be facing significant hardship in supporting full operations and serving customers during this health crisis (especially given the size, scope, and complexity of operations from collection agency to collection agency).
Due to this, as well as executive orders that limit the operations of debt collection businesses, debt collectors may be limited "in their ability to service their clients and debtors altogether." NACARA urges reasonableness among regulators, including flexibility with work-from-home restrictions for debt collectors and regulatory deadlines.
As for a message to consumers, NACARA states:
If you are concerned about your ability to make timely payments or otherwise meet your debt obligations, contact your collection agency as soon as possible. While many people and businesses may find this difficult, keep in mind that a collection agency can’t offer help without communication. Payment assistance, including deferral of payments, or other mitigation options may be available.
NACARA also urges regulated entities to work with consumers during this time:
At a minimum, regulated entities should take reasonable steps in an attempt to offer assistance to all consumers and commercial debtors who have suffered a loss of income due to this emergency or have otherwise experienced impacts that could affect their ability to repay their debts.
The message lists several actions that businesses could take, such as foregoing reporting of payment information, offering payment plan modifications or forbearances, and to proactively reach out to consumers to provide information available assistance.
Amid a flurry of calls for an all-out ban of collection efforts over the past few days, NACARA's message is more reasoned and thought through. The ARM industry appreciates NACARA's understanding of the nuances of not just the debt collection industry, but of the role it plays in helping consumers through some of the hurdles presented whenever consumers are faced with difficult financial times. Debt collectors do more than just collect—they provide vital information and resources to consumers. They answer questions, they can implement hardship measures such as amending or delaying payment plans, informing creditors of the consumer's inability to pay, and inform the consumer of special assistance plans tailored to their type of debt. And, as NACARA states, "a collection agency can’t offer help without communication."