Who Makes out in a Recession?

Who makes out in a recession?  The answer is NOT collection agencies… the answer is YOU.

As the world is reeling from being subjected to a pandemic virus that has indeed affected every person in this country, the thought struck me last night as to what the future economic forecast will look like?  As officials project the total of positive tests across the country, as protesters begin demanding that they be able to go back to work, as struggling businesses make difficult decisions in an effort to remain viable, and as our government officials try to reassure us that this country will come back strong, the realistic truth presents itself.


Nothing will be as it was.

This isn’t the first time our country has had to find ways to raise ourselves from financial hardship. However, in the face of the uncertainty of when this country opens back up, and the unknown of whether people will go to restaurants again, or if anyone will choose to fly, or if hotels and convention centers will rebound; the simple truth in our recovery comes down to a couple of hard facts.  Those who have paid attention to their health and finances are those that will be strongest.

Both health and finance tend to have times when they are out of our control. Some folks have health conditions they develop because of bad habits, some have health conditions that are hereditary and they have no control over them. Right now, health is one of the most important focus’s each of our families, employees, and our government are trying to keep in our control.  Those with healthy habits are more secure about their chances of fighting off illness. For those who have not had healthy habits, this pandemic may have created a harsh reality that changes those habits.

As events have unfolded to focus on keeping our nation healthy, for many, finances seem murky. Choices are being made to preserve health, but not finances. As with health, some could be in great financial condition, while others may have financial strain thrust their way. For those who have paid attention to their finances, who have saved, who have limited their spending to a budget, and who have paid attention to their credit, those people will recover soundly.

As my thoughts continued to swirl, many answers come to mind to the questions so many of us are thinking.  There are often huge advantages presented during a recession. As the economy struggles to come back, businesses will have deals to draw people back into spending money. These deals will be on cars, boats, condos at the beach, vacation packages, cruise lines, and things like Groupon deals will be unbelievable (side bar I will be getting my roots done)!  None of this even considers the stock market or housing market of which I have many friends OBSESSED with buying LOW and waiting for things to come back into full swing again.

So, who can take advantage of that? Those who have saved cash, don’t miss payments, communicated with a collection agency early, and maintained their credit score; they will have the upper hand. Within all of this rambling, I’ve come up with those promised answers to questions I imagine us all thinking.

Are collection agencies making out during a recession?  No. Consumers are, and will, if they know what to do and when. Now is the time, but how do you do it?

  • Communicate to your creditors. Look at the options available, and make them work for you. Credit cards are offering a deferment without penalty, but you have to ask!


Is there any other time when consumers are offered opportunities to reallocate their expenses in a way that can make them credit healthy?  In my lifetime I have never seen anything like this chance.  When opportunity presents itself we want our consumers to reach out and grab it. Set yourself up to be able to take advantage of the economic opportunities that may lay ahead. Here are my suggestions:

  • Ask about settlements with collection agencies. They may or may not be available; but if not, find out if there is any chance an item on your credit report is removed after it is paid. Either way, a PAID item is still better than an unpaid item.
  • Reach out to your insurance carrier and see if they are offering reductions in premiums. After all, you aren’t driving as much.
  • Reach out to your car lender and see if they are deferring payment without penalty; some are offering two months!
  • Check with your mortgage they may have a deferral as well. But you have to ask!
  • Reallocate your daycare expense, after school expense, monthly gas expense (which you aren’t spending) to pay down debt. Don’t buy more toilet paper!
  • Use your stimulus (if you do not need it for the bare necessities) put it in savings to help create the down payment for a house if you do not own one. Or allocate it to debt so you will be in a better position to save money going forward.

If you do these things, you may be thinking like the billionaires of this world and using other people’s money to make yourself financially healthy.  Use that deferral to cover something else. If you have good credit, explore refinancing opportunities and reduce your monthly mortgages expense. If there are a few items on your credit report that you just ignored…. Now is the time to take advantage of the recession.

My thoughts swirl at night as I try and find ways to communicate to the public and help others understand, we aren’t out to get you. When we as a collection company are profiled as the big bad “credit police” we are often just simply doing a wellness check. If you have had something on your credit since 2017 the pandemic didn’t cause that, something else did. What the pandemic can do now, though, is make us reflect on ways we can improve. Improve our habits, improve and protect our health, and improve our finances so that we can be strong in the event we are faced with a second wave of stay-at-home orders. We are checking on you, our calls have not stopped, however we are working with folks in many ways that have not been available before. We also need to continue to make people aware of what could hurt their financial health. If you don’t know, you can’t fix it.  That doesn’t make us the bad guys. That just makes YOU more informed.

So now in this long story as I wrap it up, you now know who I believe can make out the best in this recession. You.

2020-05-04T17:06:58+00:00May 4th, 2020|KLS Recommendations|