At a recent TBMA conference, Gregory Sheperd, president Meridian Financial Services, discussed critical issues surrounding non-dues paying owners, collections, and the escalating necessity for deed recovery in the timeshare industry. The following is a review of the key issues and strategies for collaborating with an experienced collections agency.
Preventing Delinquencies: The Importance of a Comprehensive Policy
Mitigating delinquencies begins with the establishment of an effective assessment billing and collection policy. This policy should intricately detail assessment dates, invoicing schedules, late notices, charges, and the escalation process to collections, liens, and foreclosure. Adherence to this schedule proves paramount, as any delay can significantly impact overall recovery and association wellbeing.
First-Party Call Campaigns: Proactive Communication
Initiating a first-party call campaign when an account becomes delinquent proves to be an effective strategy. These calls, initially soft-scripted, serve as reminders and educational tools for owners about the consequences of non-payment. For associations lacking the resources for in-house campaigns, outsourcing this service to professionals on a contingency fee basis is a viable option.
Annual Review of Late Notices: Clear and Effective Communication
Regularly reviewing late notices is essential to ensure alignment with the board’s message and regulatory requirements. Late notices should evolve in tone and urgency, reflecting the progression of the collection process. Specificity and clarity in late notices are vital to conveying necessary information without overwhelming the consumer.
Dealing with Bankruptcies and Deceased Accounts: Proactive Engagement
Active engagement with bankruptcies is crucial, including educating trustees about ongoing timeshare obligations post-bankruptcy discharge. When dealing with deceased accounts, prompt communication with the estate and understanding the implications of estate closure is imperative. Foreclosure may become the only option if timely action is not taken.
Addressing Attorney Interventions: Collaboration for Resolution
Rather than avoidance, collaboration is key when dealing with attorneys targeting dissatisfied timeshare owners. Associations can work with these attorneys, negotiating and communicating to find resolutions before accounts are referred to third-party agencies. Understanding owner dissatisfaction and addressing exit needs may prevent accounts from reaching a critical stage.
Addressing Foreclosure and Resale Mechanisms
While foreclosure on a timeshare is a last resort, associations must have mechanisms in place for resale if it becomes inevitable. Because foreclosures can be expensive, discuss all options for avoiding them with your collection agency.
Understanding the Importance of Exit Programs
Timeshare owners often seek ways to exit their contracts for various reasons. Acknowledging the significance of exit programs, associations must collaborate with collection agencies to facilitate a mechanism for consumers to responsibly exit their timeshare commitments.
Utilizing Third-Party Collection Agencies: Compliance and Optimization
When prevention measures fail, the placement of accounts with third-party collection agencies becomes essential. Compliance with the Fair Debt Collection Practices Act is mandatory, and associations should understand the agencies’ policies on data scrubs, statute limitations, and credit reporting. Effective communication and sharing of relevant information enhance the agency’s success in recovering delinquent accounts.
Setting Clear Expectations with Collection Agencies
Effective communication between timeshare associations and collection agencies is crucial. Associations must articulate their needs, considering the time it takes to potentially sell a unit, legal fees, and other associated costs. Emphasizes the importance of transparency in conveying these expectations to collection agencies, enabling them to deal with consumers more efficiently.
Tailoring Approaches Based on Consumer Circumstances
Collection agencies must be adept at identifying consumer needs and tailoring their approach accordingly. Whether it’s a lack of understanding about the product or changes in familial situations, agencies can negotiate processes like “Deed Backs.” Associations should communicate these nuances to collection agencies, allowing for flexibility in dealing with individual cases.
Providing Information for Settlements
Associations should actively engage with collection agencies in gathering necessary information for settlements, including a “Statement of Information.” This document typically includes information such as the owner’s income, expenses, assets, and liabilities. The purpose of the Statement of Information is to provide a comprehensive overview of the individual’s financial standing, helping both the creditor and the collection agency assess their ability to meet their financial obligations.
Keeping Agencies Informed about Resort Dynamics
Regular communication between associations and collection agencies is key. Associations should provide updates on resort-related issues, such as special assessments, positive developments, or challenges. This information empowers collection agencies to convey a clear message to consumers and handle objections effectively.
About Meridian Financial Services
Since 1989, Meridian has provided third–party collections for the shared ownership industry. As an affiliate of Interval International, Meridian has developed industry–specific financial risk management services and effective tracking and reporting services that allow us to service partial or whole portfolios.
Meridian’s goal is to develop a partnership with our clients based on the relationships between our staff and yours. Since we are partners, we have a vested interest in delivering results to make you more successful in the long term.
For more information contact: Gregory B. Sheperd, RRP, (828) 575-5179, gsheperd@merid.com, or visit: www.merid.com