Collections Process and Deferred Payment Plans

Learn about Deferred payment plan and how it affects collection process.

In Texas Market, the Customers who cannot make on-time payment for the services utilized can opt for the deferred payment plan (DPP). It provides a way for a Customer to pay off an overdue balance over a period of time.

The overdue balance is broken down into monthly installments and a schedule is created for these installments. One of the below mentioned scenario may arise once DPP is initiated:

  • If a Customer pays off his plan by the determined final date, the DPP is said to be "complete" or "honored".
  • If the DPP is not completely paid off by the final date or any of the installments are not paid by the required date, the DPP is considered "broken" or "dishonored". Customers that break their DPP goes through the disconnect process.

When a Customer opts for Deferred Payment Plan, the Supplier sends a DPP letter to the Customer communicating the agreement. In the event the Customer dishonors the agreement, a disconnect letter is sent communicating the default and that the disconnect process has begun.

DPP Plan Types

There are currently three types of DPP that a Customer can be enrolled in:

  1. Payment Arrangement: This type allows for a number of installments (typically from 2 to 12) to be created from the Customer's overdue balance with the installments due in a sequential order.
  2. Payment Plan: This type is similar to the Payment Arrangement but only has two installments. The first must be paid within the few days of the start of a plan. The plan is in a "Pending" status until that first installment is paid then it moves to an "Active" status. The final installment must be paid on the plan end date.
  3. Pledge: This type is not a typical DPP in that instead of setting up a schedule of payments this DPP tells the amount that is to be paid by a third party. The Pledge indicates the third parties and the amount to pay by a certain date. If the pledges are not paid by the indicated date, the DPP is considered "broken".

For more information on Deferred Payment Plan, see Deferred Payment Plan.