Debt Collection: Peeling the Layers of the Onion

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July 24, 2014 by Lisa Brammer

Businesses oftentimes farm out non-core functions to third-party companies.  When shopping around, looking to outsource the collection of bad debt, there are many aspects of the collection process that are—and should be—taken into account when selecting a third-party collection agency.  Training, compliance, quality assurance, and customer experience are a few of the biggies.

Most reputable agencies will have something in place that speaks to each of the above mentioned facets and learning how these are managed begins the process of peeling the layers of the onion. But, how many layers deep should you peel?

Today’s blog is going to address e-OSCAR, one of the tools collection agencies have at their disposal to use as part of their collection process. 

What exactly is e-OSCAR?  It is a web-based Online Solution for Complete and Accurate Reporting developed by credit bureaus Equifax, Experian, Innovis, and TransUnion. This automated system allows data furnishers (such as collection agencies) and credit reporting agencies to create and respond to consumer credit history disputes. 

Let’s back-up a little.  When an account is placed at a collection agency and the debt is not paid in full within 30-60 days (depending on the agency or a creditor’s requirements) the past-due account will usually be reported to the credit bureaus. Here at UCS we report to the top three bureaus, Equifax, Experian, and TransUnion at the end of each month.

When a bad-debt is reported to the credit bureaus, the consumer’s credit score will usually take a hit. And a decreased score can sometimes encourage a consumer to pay their bill—especially if they want their credit score to rebound.  Other times the reduced credit score prompts them to dispute the debt. This is where e-OSCAR comes in.

When a reported debt is disputed, the credit bureaus will post the dispute on e-OSCAR along with a response code which indicates why the consumer is disputing the debt.  There are many reasons why a consumer will dispute a debt and some of these reasons are legitimate such as; identify theft, original creditor was already paid, or consumer is not liable for account, etc.  Other times consumers dispute a debt because they understand that if the data furnisher does not respond to the dispute within the designated time frame (usually around 30 days from when dispute is filed) it will be deleted from their credit report.

Checking e-OSCAR, verifying debt/account information, and responding to disputes is a tedious task that should be handled in a timely fashion. You need to keep up with the many incoming disputes.  It’s imperative to check into the concerns of consumers who have had their identity stolen or other genuine disputes in order to keep account information accurate for all concerned.  It is equally important to verify debts that have been accurately reported to the bureaus so they are not removed from the consumers’ reports. Many sophisticated consumers understand they are permitted to dispute the same debt repeatedly.  They know—sometimes from previous experience—if an agency does not respond each and every time within the allotted time frame, the disputed debt will be removed from their credit report, even if valid!

Many lenders use credit scoring when determining credit worthiness. A person’s credit score can influence interest rates on mortgages, car loans, credit cards, or rates for insurance premiums.  And a poor score may prohibit a lender from providing credit at any rate. Credit scores may have a profound impact a person’s financial health, therefore accuracy in reporting and verifying debt to the credit bureaus is a must.

The FCRA (Fair Credit Reporting Act) states that collection agencies have a duty to investigate any disputed information and e-OSCAR is a great place to find and respond to these disputes.

Next time you speak with your collection agency ask them, “What’s your response rate on e-OSCAR?”  They should answer, “100 percent!”

Founded in 1950, United Credit Service, Inc. is a full service, licensed revenue cycle management and debt collection agency in Wisconsin providing highly effective, customized one on one management and recovery solutions for our business partners. We offer pre-service collection solutions as well as traditional back-end collections. Visit our website at http://www.unitedcreditservice.com or call 877-723-2902.

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