For most people, income tax time is one of those good news, bad news types of situations. The bad news is having to sit down and put together a return and submitting it to the Internal Revenue Service. The good news is that, for most people, a refund is the reward for the time and effort that went into filing the return.
For the collection industry, the stakes are much higher. A poll of individuals that was taken just before income tax season started in late January revealed that about 25% of people plan to use their income tax refunds to pay down debt. For those individuals, using the windfall of an income tax refund to pay down debt is a responsible choice to make. For collection agencies, being there when the funds clear and the individual is ready to start paying debts is an important place to be. There is not another time of the year when the financial fortunes of so many people are given such a boost as when they cash their income tax refund check.
In the best of times, individuals do not want to be bothered by debt collectors. They either do not have the money or the responsibility to want to repay their debts. But when they receive their income tax refunds, people often use some of that money to pay down some of their debts. How those debts are chosen is not always a science. Maybe it is the debt with the largest balance. Maybe it is the debt that has been outstanding the longest. Or maybe it is the debt where the collector just called to remind the individual that a payment was due.
Income tax season is the one time of year when a large population of the country comes into a financial bonus. Last year, the average tax return was about $2,900. For many families, that is not an insignificant sum of money.
The saying is not entirely appropriate, but the squeaky wheel does tend to get the grease. A collector who is empathetic, which is something we talked about last time, and who shows patience and honestly cares about the financial situation of the person they are calling is going to be the one who gets paid when the income tax refund check clears.