Boosting Your Bankruptcy Recoveries

William Mapother
January 14, 2005

Knowledge is the most important ingredient in a successful bankruptcy recovery program. Bankruptcy specialists must be well informed and should be supervised by someone who also is well informed.

Lack of knowledge is dreadful for a number of reasons, not the least of which is the timidity it engenders in less-informed staff. Timidity has no place in aggressive recovery strategies. Credit unions should have well-informed bankruptcy staff working in tandem with well-informed attorneys. That’s why I encourage credit unions to bring their attorneys with them to bankruptcy trainings.

Creditors need to know when (and when not) to use attorneys, which requires that staff know and understand the right bankruptcy law.

Attorneys should only be used when staff cannot effectively (or legally) handle a bankruptcy matter without an attorney. This is far more economical, and well-informed, well-trained staff can do amazingly good work in recovering on bankruptcies.

The Real Opponent

In most bankruptcy cases, the real opponent is not the member, it’s the member’s attorney. How can a poorly trained bankruptcy specialist or collection manager effectively compete with a lawyer schooled in bankruptcy law and who practices it daily?

The questions asked, and puzzled looks displayed, during my seminars confirm that bankruptcy staff need more bankruptcy knowledge.

Even more dramatic is what I have learned from on-site consulting: The underperforming bankruptcy specialist is typically supervised by someone who knows little about bankruptcy law and practice.

Such a supervisor has difficulty judging bankruptcy performance, and, even worse, is often subjected to double-talking from staff members (and sometimes even from outside counsel) who are underperforming in many bankruptcy situations. In this situation:

• Employ the right person as bankruptcy specialist, then train and retrain.
• The two supervising levels above the specialist should be well-informed about bankruptcy. These supervisors (typically the collection manager and the VP of lending) know what performance to expect from their bankruptcy specialist and bankruptcy counsel, and how to measure it.

This may sound burdensome, but you cannot believe the improved recoveries I see in shops that adopt this approach.

William Mapother is a bankruptcy specialist in Louisville, Kentucky. Visit his website at mapother.com or contact him atl 502-587-5440.