Credit collection business in for tough time

Everyday, Ruby Gozon, a collection supervisor at the United Pacific Collection Agency, roams around the island, knocking on people’s doors, begging them to pay their debts.

In running after debtors, Gozon has been cursed, threatened and even attacked by dogs unleashed by house owners. “Most of the time, I approach them in a nice way, but there are times when you have to be tough because they keep on ignoring you,” she said.

While there has been an increase in the number of clients, Gozon said debt collection has been extremely difficult since the decline in the island’s economy.

A year before the plunge of Asia’s economy, people would even go to their office bringing with them thousands of dollars in cash to pay their debts. “Now, you’re lucky if you can collect $500 or even $200 from one person, ” said Gozon.

In these hard times, Greg Cruz, manager of Saipan Collection Agency, has learned the value of patience in this business of debt collection. As long as people make a commitment to pay, Cruz said he never loses hope that one day, they will be able to wipe out their debt.

He said it is very important to maintain good relationship with debtors in this business. “Some collectors are very aggressive, they embarrass you, and nobody wants to be treated that way,” he said.

On this island, where it is so easy to open a checking account, it is not surprising then that the common complaint handled by collection agencies is the issuance of bad checks.

Barely six months old, Saipan Collection Agency only had $40,000 receivables when it opened. It’s good record of collection must have spread so fast that the number of clients have increased amounting to $2 million in account receivables. Saipan Collection has an average of 8 to 12 clients a day.

When the company started in April 1999, Cruz said the owners decided that it will be a different collection agency.

“Instead of harassing them, we talk to the person, we find out their problems and their capacity to pay. If they only put $10 on my table, I have to accept that,” said Cruz.

Since Saipan is very small, it is so easy to trace where a person stays even if he would keep on ignoring the letters sent by the company. A researcher who is also known as a skip tracer will find the person even if he or she has transferred to another address.

Saipan Collection Agency charges a client 33 and one-third percent of the principal amount to be collected. United Pacific offers two types of payments to individual and corporate clients. Usually, the company asks individuals for initial payment of $25 to make sure that their efforts in collecting will not go to waste in case the debtor has no plans at all in paying whatever money he owes the client.

Unlike other jobs, a debt collector has to adhere to strict rules and regulations under the Federal Fair Debt Collection and Practices Act. “You cannot just call anytime of the day and talk to any relative or friend of the person about his or her debt,” said Mirasol Hernando, administrative assistant of United Pacific.

Before the proliferation of phone cards on the island, Micronesian Telecommunications Corp. used to be a big client as contract workers incur huge accounts in their overseas calls.

A six-year old debt is usually not accepted by the lawyer of United Pacific but there are some cases when a person suddenly has a change of heart and pays. “It is a stressful job. Your client calls most of the time to find out if you have collected and the debtor would make angry calls because you follow up when he/she would pay,” said Hernando.

Those with unpaid debts on the island are reported to the Credit Bureau in Guam, where various financial institutions in the CNMI and the United States check on persons background should he or she decide to borrow money again .

Sending the case to the lawyer is usually the last resort of the collection agency. “In our company, the lawyer will study the client’s case very well and usually, he throws it back to us saying it is a hopeless case and we should no longer waste time,” said Gozon.

Saipan Collection Agency will not deal with any debt more than three-years old and avoid cases which have something to do with real estate because it is time consuming.

“I just wish I can take away the checkbook issued by the banks to these people because they already have huge debts and they still won’t stop issuing bad checks,” said Cruz.