Sometimes there is big news when it comes to debt collection decisions, and one of those headline-making events happened in early 2018. One of the most significant sources of outstanding debt in America stems from student loans. The federal government, through a court filing, has decided that two companies will work towards collecting those debts.
The contracts to collect on defaulted student debt were awarded to… Performant Recovery and Windham Professionals. Combined, the two contracts could be worth $400 million. The reason the contracts came through a court filing is that the federal government had been working on a legal dispute on how student debt could be collected.
Why This Helps More Than 234,000 People
In the spring of 2017, a judge placed a restraining order that barred the federal government from contracting with debt collectors to catch up on the defaulted student loan debt. For many of those borrowers, without having a debt collector they could begin making payments to, they were blocked from getting into credit rehabilitation programs.
By going through a rehabilitation program for the debt, borrowers can have the default removed from their record, and then they can return to regular debt servicing. By strangling that option, it imposed a larger negative impact on the borrowers, while in the meantime it meant the federal government was also missing out on having debts collected. This caused undue suffering for those that owe and made collections that much harder, as when collections aren’t initiated early then they get less likely to be recovered.
The total debt held by the 234,000 borrowers that were in default totaled around $4.6 billion. While the court order was in place blocking debt collectors from working the issue, that meant millions of dollars that could have been collected was pushed off or possibly lost completely. For the two companies that have landed this opportunity, while the collection work will be difficult, they will undoubtedly be highly rewarded.
Who are Performant Recovery Inc and Windham Professionals
Performant Recovery Inc. was founded in 1972 with their headquarters located in Livermore, California. Initially, the company was named Diversified Collection Services and changed their name to Performant Recovery in 2012. Known for their work in finding wasteful, erroneous and fraudulent processes, Performant Recovery has been focused on finding payment errors for both government and private agencies. Most of their work has been associated with the healthcare industry, but the scope of the government contracts they have previously carried made them a strong choice for the student loan contract as well.
Windham Professionals started up in 1982 in Salem, New Hampshire and has been focused on accounts receivable management for higher education organizations from the beginning. With a long history of handling all things related to education payments, including debt consolidation, repayments, and financial literacy programs, Windham Professionals is uniquely qualified for the contract because it’s the industry they have always served.
Why Handling Your Accounts Receivable is Important
As a business, staying on top of your accounts receivable is always important. Letting debt slide for too long means that not only are you missing out on the money that is rightfully owed to you, but it also means you may encounter more significant roadblocks like the court order handed down in the student loan case. The longer a debt sits without being paid, the less likely it will be recovered, so waiting to bring in a debt collection service means you could be harming your business.
The amount of time it took for Performant Recovery and Windham Professionals to be awarded the contract for student loan collections shows the worst case scenario for having accounts recovered. There can be many roadblocks to being paid what is owed so keeping the pressure on before more of those roadblocks can be set up will help you stay ahead.
As a debt collector, seeing how these individual companies have earned the contract award for such a large industry shows that being consistent and a leader in the industry can provide great rewards. It also shows that whether you focus on a specialized area of debt collection or have a broad understanding of the rehabilitation process then your efforts can have a great return.
The biggest takeaways from this news are that outside forces, such as government intervention, can be harmful to debt recovery efforts and that diligence in those efforts can be rewarded. While it may not always be easy, staying on top of your A/R will prevent stalling efforts from being as damaging. Taking a page from Performant Recovery and Windham Professionals is proof that hard work and experience will pay off in the end as well, as the biggest award of the year is in their hands.
