Consumers are struggling with their finances amidst economic fallout from the COVID-19 pandemic. As a result of the stimulus payments and expanded unemployment benefits from the CARES Act, some consumers received a temporary income lift as lenders offered forbearance and hardship programs.
While these short-term programs are beneficial and help build trust between lenders and consumers, lenders are at risk as these accommodations end. Many consumers could continue to struggle, resulting in increases in delinquency and longer recovery and collection timelines – ultimately impacting lenders’ profits. At some point, collections volumes will increase. Lenders will need to prioritize accounts, segment those in forbearance and deliver timely treatment. Those who aren’t prepared will struggle to handle the volume, need more resources and lose opportunities to maximize their recoveries. That’s why lenders need to evaluate their collections strategies now.
Download our lender quick guide to learn ways to prepare for and manage collections in an evolving environment.