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Recovering Bad Debt Series


The reason becomes clear when you consider what has been occurring over the past 40 years; the population of America has gone up at a rate notably greater than the rate of increase in light vehicle purchases (new and used). Median Household income has virtually remained constant over that same period while inflation over that period has exceeded 30%. More Americans need or choose to use alternative transportation (i.e. public transportation, Uber) and are choosing to live and work in urban environments that allow walking, biking and ride sharing.

Given these realities, to thrive if not merely survive, auto finance companies must do all of the following three things well; Compete successfully for consumer vehicle contracts; Keep those contracts paying longer; and, finally, Recover maximum "bad debt" losses.

Presidents and CEO's preoccupy themselves with competing for and acquiring new contracts; CFO's with keeping and maintaining pay performance... but too few decision makers AND STAKEHOLDERS focus on Recovering "bad debt".

With limited opportunities in this competitive market to acquire significant numbers of new contracts (short of purchasing contracts from competitors or the companies themselves) companies must find profit in their existing portfolios. Better customer service and monitoring is critical in order to keep the increasing number of marginal contracts paying.

However, the reality is that "bad debt" is getting larger and cannot be ignored. If a company fails to address its "bad debt" timely with a thoughtful STRATEGY, the relatively short shelf life (time limit generally 4 years from default) for that bad debt will end. It cannot then be collected, sued or sold!

So, the question is, are your profits so large that you can afford to write off your "Bad Debt" without considering some strategy of recovery? If your answer is "yes", then you do not need Seidberg Law. If your answer is "No", you just might want to stay in touch with our continuing email series.

**SLO credits, and for statistical information

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