For most firms enforcing the SOL logic begins the moment new accounts are received from a client. Once the accounts are loaded into the firm's software there is usually a manual review process where a user examines available data such as the date last payment was made to the client, charge off date, date of service, what types documentation are on file and from there they calculate a SOL date based on that debtor state's rules for that type of an account (credit card, etc.). As payments are posted to accounts in some situations the SOL date on that account can be extended. However, because determining if an SOL date can be extended requires an understanding of each state's SOL procedures when payments are posted often the SOL dates are simply left alone.
So what's the problem with this? Complicated manual reviews of hundred and in some cases thousands of new placements are prone to human errors that unnecessarily increase the exposure a firm and their clients have to litigation. By not updating the SOL calculation as payments are posted the firm significantly limits their opportunity to collect on an account. In today's ARM industry these outdated manual procedures are unacceptable and organizations need to look to their collection software providers to help them manage this process.
Cogent's automated SOL logic enables a firm to define by state and claim type how SOL will be calculated on their inventory of accounts. As new placements are imported into Cogent, the collection software systematically evaluates the different dates on the accounts to consistently calculates a correct SOL date. Once the SOL data has been calculated and the new placements are introduced into Cogent's standard workflow, the software determines if each account is either out of statute or approaching statute expiration so it can be set aside preventing demand letters from being generated and flagging it to be returned to or reviewed with your client. As payments are posted in the collection software, Cogent will again evaluate SOL and based on state and claim type and determine if the date should either be extended or in some cases, where it can be revived if the statute has previously expired. Finally, as judgments are recorded SOL / expiration dates are calculated automatically and the standard workflows schedule renewal reminders automatically in a pre-determined number of days / months prior to expiration of each judgment.
By removing the human element and automating the management of SOL a firm is able to limit both their client's and their own exposure to legal fees and damages associated with litigation. Considering today's placements volumes and the continuing increase in the number of suits filed each month claiming FDCPA violations, it's easy to see how the cost of this exposure could be enormous. Additionally, maximizing the window of opportunity your firm can pursue each and every account helps you maximize recoveries for your clients and fees for your firm.
To find out more about Cogent and the automated SOL Logic, please contact us today. If you have additional thoughts or suggestions on how to manage SOL, we would love to hear from you.