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Banks Intensifying Collection Efforts Despite Consumer Struggles

Despite the state of the economy and consumer problems with paying the bills and getting loans, banks are stepping up their efforts to collect on credit card payments.

According to The Wall Street Journal, banks like Citigroup Inc., Bank of America Corp. and American Express Co. are hiring more collectors, increasing calls to delinquent customers, contacting late-paying customers earlier and developing programs that will help borrowers out by temporarily postponing payments or settling debt for less than they owe.

Because of the rising unemployment rate, high fuel costs, housing market crisis and other economic problems, consumers are being forced to default on their credit card payments.

The Wall Street Journal reported that according to the American Bankers Association, the percentage of delinquent credit card accounts rose to 4.51 percent in the first quarter, which is up 0.1 percent from the first quarter last year.

Banks are only expecting the problems to increase as economic reports show no sign of relief in the next several months.

This increased awareness means that if you have forgotten just one payment, you could be getting a call from the bank.

What should you expect if you are pay a bill late?

Besides banks calling you sooner and more frequently, the banks might offer people who call early a negotiable payment plan or cut on interest rates and fees.

Also, if you are carrying a big balance, you may be offered incentives to pay off the debt quickly.

Foreseeing the Problems to Come: What's in Store for Banks and Consumers?

According to The Wall Street Journal, the Federal Reserve stated on September 8 that revolving debt rose in July at an annual rate of 4.8 percent, which is higher than the 3.5 percent increase in June. This seasonally-adjusted rate reflects the balances on people's credit cards.

Banks are feeling the pressure too as they make a better effort to collect on past-due loan and credit payments.

And for once, banks come knocking on your door bearing gifts.

For borrowers with large balances, financial institutions like Citibank are offering a match percentage of payments that are more than the minimum amount.

Washington Mutual Inc. is helping out borrowers who are late on their payments by directing them to a self-service Web site to set up payment plans.

And to get customers to call them back, some banks are sending borrowers phone and gift cards that need to be activated before use.

Despite banks increasing contact with borrowers, it may be easier on you if you contact the creditors once you sense trouble. Some financial institutions are helping delinquent customers create budgets and predict how events will affect their finances. For example, The Wall Street Journal reported that Discover Financial is increasing its staff to respond to emails from consumers looking for help with their payment plans and problems.

Although financial issues and missed payments are never fun to deal with, it is important for consumers to deal with banks. With the increase in delinquent consumers, banks are more apt to pass past-due accounts to third-party collectors. These collectors' tactics are more aggressive than and not necessarily as friendly as the bank's.

Of course, if you are already facing calls on past-due debts from aggressive creditors, you may be able to seek protection in the form of bankruptcy's automatic stay, a court order that protects further collection actions against you during your bankruptcy case.

To lean more about the automatic stay and how filing bankruptcy may help you get relief from debt collectors, fill out the below form to connect with a bankruptcy lawyer:

What The Banks Plan to Do

American Express

• Customized Payment Plans
• Flexibility with interest rates, fees, plan length and monthly payments

Bank of America

• More efforts to reach customers with expanded staff
• Possibly waive fees, reduce interest or work out payment program

Capital One Financial

• More aggressive collections by calling sooner and finding tailored solutions

Citigroup

• New collectors
• Increased calling frequency
• Expanded forbearance programs
• Offering targeted settlement programs

Discover Financial Services

• Re-launch Web site to help card members with payment questions
• Increased staff to respond to emails

J.P. Morgan Chase

• Contacting customers about late payments and going over limits
• Setting up hardship programs

Washington Mutual

• Temporarily lowering payments or reducing overall payments
• Self-service Web site to help borrowers set up payment plans

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