Going to School on Systematic Collection Efforts

by Katie Sloan
Gary Metcalfe
National Credit Systems, Inc. – Colorado Region

Student housing. It’s your niche in the industry or a necessary part of you…

Gary Metcalfe
National Credit Systems, Inc. – Colorado Region

Student housing. It’s your niche in the industry or a necessary part of your portfolio due to market demographics or just plain geography. Whatever the case, it is a sizeable segment of the multifamily housing industry and growing. In an article published on the Multifamily Housing News’ (MHN) website in July 2008, this market will continue to grow at least through 2012. And, when it does level off, it will do so with the demand for good, clean, safe affordable housing at much higher levels than in previous decades.

And with this new influx of demand comes the inevitability that some of these future pioneers of the industry will fail to meet their obligations leaving the property high and dry to try to recoup their losses. Those in student housing management will then be faced with the cold, cruel reality of needing a systematic, proactive collections program, just as much as their brothers and sisters in the other segments of the multifamily housing industry.

Collections of past due rents and fees doesn’t have to be the tedious and sometimes gut-wrenching task it is often made out to be. By setting up a systematic, structured approach to the task will often lead to greater recoveries.

In 2008, the ACA, The Association of Credit and Collection Professionals, published a report entitled “The Value of Third Party Debt Collection To The US Economy in 2007.” The report, researched and compiled by PriceWaterhouseCoopers LLP stated in its Executive Summary that:

‘third party collection agencies’ efforts “resulted in $40.4 billion of debt being returned to creditors on a commission basis.”

That’s billion with a “b.” The report went on to state that the significance of these returns to the consuming public was a savings of approximately $354 per household due to reduced prices and greater consumer purchasing power. The report likened these savings to “86 days of electrical service or 127 gallons of gasoline.” Put in terms of today’s college freshman it would be the equivalent of several textbooks or … more likely, a month’s supply of pizza and beer.

But that’s what the professional collection agencies are able to recover, right? That’s why management companies hire them. Exactly. While it’s not unreasonable to assume that the property management team at Animal House Student Apartments near the campus of Enormous State U. might be able to recover some lost revenue for the property, by in large they do not have the training, experience nor the tools to successfully act as a full-time collection agency. Their primary responsibility should be to keeping their existing residents happy and units occupied. And as we all know, collections at the property level will rightfully take a backseat to lease and resident services every time.

That doesn’t mean that property manager’s at student housing sites cannot successfully recover

Some lost revenue on their own. In fact, some property management companies require their on-site staffs to try to collect on their own during the first thirty days after move-out. Many collection agencies, including our own, will offer advice and materials at no charge to aid the properties’ in-house attempts.

Formula: Student Housing Property Management


Collection Agency


Effort Squared = Recovered $$$

These value-added services include training seminars on best practices for collection services and in some instances the use of collection materials including collection letters that the agency has used in the past. Sending a collection letter that has been time tested and passed the muster of the Fair Debt Collection Practices Act, is much wiser for properties than trying to write one of their own. And, getting advice and counsel from collection professionals can enhance the property’s individual collection recoveries.

Organize and Prioritize

If your student housing property utilizes an individual collection program prior to turning over residents files to a collection agency, there are several things you can do to improve your efforts. Here are a few recommendations:

1. Get organized. Set up a system to follow for all accounts which become past due.

2. Monitor problem tenants who have a history of being late and do not allow their bad debt to accrue. You are only delaying the inevitable.

3. Communicate clearly and firmly the property’s collection policy on late rent and fees. KEEP ALL CONVERSATIONS PROFESSIONAL AND FACTUAL.

4. Keep ALL records of residents current and complete.

5. Develop a thorough knowledge of The Fair Debt Collection Practices Act and all applicable Fair Housing statutes. (See: The Fair Debt Collection Practices Act at www.ftc.gov/os/statutes/fdcpa/fdcpact.htm)

6. Write a phone script that meets FDCPA standards for use in contacting former by phone and use it within the parameters stated in the FDCPA.

7. Prioritize which accounts you plan to try to collect on your own, and set a reasonable timetable for in-house collections. (usually no more than 30 days).

8. Don’t deviate from the timetable. Turn over all files that exceed the deadline promptly to your agency.

9. Be flexible in your demands. If a former resident makes an offer to pay that is reasonable, it might be in your best interest to settle.

10. Be fair to your agency as well as your former residents. Remember collection agencies work on a contingency (they get paid a percentage of what they produce).

Don’t hold files longer than the 30-day window; doing so almost always decreases collection results.

Successful partnerships are no accident. They require hard work, cooperation, a mutual goal, a dash of luck and a healthy belief in each other. Keep pushing together toward your collection goals and you’ll be pleased with the results you are able to achieve together.

Items Needed in Every Collection File

The following is a list of items that you should provide your agency from a former resident’s file for collection purposes:

a. Statement of deposit or ledger

b. A signed lease agreement (all pages)

c. An application with all blanks (or as many as applicable) filled out

d. A damage report that the former resident checked off and signed at move-in

e. A roommate waiver (if applicable)

f. A judgment (if applicable)

g. Any NSF checks

Gary Metcalfe is with National Credit Systems, Inc., a national collection agency headquartered in Atlanta, with nine regional offices throughout the U.S. Established in 1991, National Credit Systems focuses its efforts almost exclusively on serving the collection needs of the multifamily housing industry. Over 98 percent of the agency’s portfolio consists of accounts within the industry, and to date, the agency has recovered over $160 million for its clients.


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