By: Jeana Dunaway

Every credit union loves the part of lending where a member drives off the lot in a car they could not have financed anywhere else. However, nobody puts the other part on a brochure, which is the call you have to make to a member when their payment is 60 days late. 

Unfortunately, that part matters just as much, and maybe even more. How a credit union handles its hardest moments is what members remember long after the easy ones fade away. Handled carelessly, collections turns a temporary setback into a permanent goodbye. Handled well, it can hold a relationship together through the worst stretch of someone’s year.

The trouble is, doing it well takes capacity most credit unions don’t have.

Collections Is Relationship Work, Not “Dialing for Dollars”

Collections is the function credit unions are least equipped to staff and least eager to grow. It demands specialized people, disciplined processes and a tone that stays firm and humane at the same time.

At a small or mid-sized credit union, one or two team members often carry the entire delinquent portfolio. And it seems the moment volume spikes, the accounts that need the most attention get the least.

This is the gap CU*SOUTH Collections was built to close, because we think of it less as outsourcing and more as extending your own team. CU∗SOUTH operates as an extension of the credit union, which means the calls, the notices, the member conversations, etc., all happen under your name, in your voice.

To the member, it never feels like a handoff to a faceless agency. It feels like their credit union reached out, because in every way that counts, it did. And to be clear, it never feels like we’re “dialing for dollars.”

The work runs on strategy, and our team will help determine which accounts to prioritize, when to reach out and what arrangement actually gets a member back on track instead of pushing them under. The program adjusts to what each credit union needs most, i.e., heavy support on early-stage outreach for one, and full delinquency management for another. The goal is never to squeeze a member. It is to find the path that recovers the loan and keeps the relationship intact.

The Numbers Below the Headline

That goal is getting harder to reach, and recent data explains why.

At the industry level, credit unions look steady. But if you look closely at auto lending, the picture changes. America’s Credit Unions reports that 60-day delinquencies on credit union auto loans have climbed to levels not seen since before the pandemic. Additionally, data from the New York Fed shows 5.6% of outstanding auto debt was at least 90 days delinquent in the first quarter of 2026, up 12.2% from a year earlier.

Two forces make this sharper for credit unions specifically. First, the loans slipping are increasingly prime and near prime. According to Experian, borrowers with credit scores of 661 or higher account for 68.4% of retail vehicle financing, compared with 15.8% for subprime and deep-subprime borrowers with credit scores of 600 or lower.

Second, credit union auto portfolios have been shrinking for two years as older loans pay down faster than new ones get written. A shrinking portfolio with steady dollar delinquency means the ratio climbs even when the raw number holds, so the math is quietly working against you. In other words, more of your members are falling behind on car loans, and the margin for error is narrower than the top-line numbers suggest.

The Hardest Cases, Handled with Reach and Restraint

Most delinquent accounts never reach the hardest outcome. Steady, respectful outreach, like a payment plan or a hardship arrangement, often resolve most cases. Sometimes, a member simply needed someone to pick up the phone with a plan instead of a threat. That is the work, and CU∗SOUTH does the bulk of it long before anyone says the word “repossession.”

But some loans do reach that point, and the case that defeats most credit unions is not the member across town. It is the member who moved three states away with a car that is now outside of your recovery agent’s territory. Your local agent cannot reach it. Often, nobody can.

This is where CU∗SOUTH’s partnership with Location Services changes what’s possible. Location Services is a national collateral-recovery firm with coverage in all fifty states. That means one due-diligence process, one vendor and one reporting stream backed by a dedicated skip-tracing team that finds collateral when things go quiet.

So, if a member moves across the country, a loan that would have been written off as unrecoverable stays recoverable. The vehicle is located, recovered safely, and when the time comes, is sold at auction with the proceeds returning to the credit union as a check rather than a loss on the books.

CU∗SOUTH carries the administrative weight of all of it: the setup, the coordination and the management, so the credit union does not have to stand up a national recovery operation or learn a new vendor relationship. And the standard that governs the first phone call governs the last one. Recovery is carried out with professionalism and discretion, because a repossession handled with class is still a reflection of the credit union’s name. Even at the end of the road, the member is treated like a member.

People Helping People, Even in the Hard Moments

No one celebrates a repossession. It is not a win; it is the outcome everyone in the process worked to avoid. But it is a reality of auto lending, and pretending otherwise serves neither members nor the balance sheet.

What serves both is handling the entire continuum, from the first reminder to the rare last resort,  with the same steadiness and respect that defines the cooperative credit union difference in the first place. People helping people does not stop at the moments that are easy to celebrate. Sometimes it looks like a difficult call made with patience. Sometimes it looks like recovering an asset three states away so a credit union can keep lending to the members still counting on it.

CU∗SOUTH does both, so credit unions can stay focused on what they do best. If delinquency is climbing in your portfolio, or you would simply rather your team spend its energy on helping members than on chasing them, the CU∗SOUTH Collections team is ready to build a program around what your credit union needs. Reach out to us and set up a discovery call.

Jeana Dunaway is the manager of collections at CU*SOUTH, where she leads a team providing collection call center services to credit unions across the country. She works with credit unions to improve collection operations, develop collection strategies and best practices and deliver solutions that strengthen performance while enhancing the member experience.