Types of debt collection services
What can you do if you have an outstanding debt that you have tried to recover with no results ?
You may need some professional help, don’t you
Let me tell you that there is a special service for your case, it is the debt collection service.
Debt collection is a large industry that includes different kinds of agencies dedicated to helping people and businesses recover their debts.
If you are searching for a debt collection service, you will find many categories. This can leave you confused and uncertain about which service to choose. So we will discuss the various types of debt collection services and how to choose the most suitable one.
Firstly, debt collection services can be categorized according to different factors such as:
- The type of debt collection agency.
- The type of the debtor.
- The size of the business.
- The location of the debtor.
- The industry from which the debt has emerged.
- The approach used to collect the debt.
Let’s learn more about each category in this article, so you will have a good knowledge of the service you require.
Types of debt collection agencies
Types of Debt Collection Agencies
We can categorize debt collection agencies into two main types:
First-party debt collection services:
This service is conducted by the creditor himself, it is usually an internal department in the creditor’s firm so it is sometimes called an internal or in-house collection company.
Third-party debt collection services :
It is the traditional form of collection companies when a creditor hires a third-party agency to collect his debt on his behalf for fees or a percentage of the recovered debt.
In some cases, debt buyers are considered a type of collection agency, but this is not accurate because debt buyers purchase your debt at a lower cost, and then try to collect their own debt so they don’t offer a debt collection service for you.
Debt Collection Services for Business :
This type of debt collection service is offered to companies or any other business but this differs according to the type of debtor.
Commercial Debt Collection (B2B Collection)
Commercial debt is the most familiar type of debt and the largest as well. In commercial debt collection service both the creditor and the debtor are businesses, so it is called a business-to-business debt collection service.
This type of debt requires a professional collector to provide a comprehensive service that includes all amicable, financial, and legal aspects of the case.
Consumer Debt Collection (B2C Collection)
In this type of debt collection service, the debtor is an individual, not a business, so he is usually a consumer or client of this company so it is called business-to-consumer debt.
These debts could be generated from credit cards, personal loans, or unpaid bills.
The amicable solution is the typical approach for the consumer debt collection cases, in a few cases the debt collector may need to perform a legal action.
National and International Debt Collection Services :
Debt collection services are sometimes classified according to the location of the debtor.
National Debt Collection Services :
When the debtor’s location is in the same country as the debt collection agency it is called “national debt collection service”.
All collection agencies offer this service since dealing with local cases is easier than international ones.
Also, the team usually originates from the same country so it has deep knowledge of the country’s culture and laws.
International Debt Collection Services :
“International debt collection service” is the collection service offered by an agency when the debtor is in another country.
It requires a specialized team that has in-depth knowledge of the other country’s language, culture, and laws.
Besides, it needs exceptional awareness of the international treaties that may affect the process of collecting the debt.
Approaches of Debt Collection Services :
One aspect that impacts categorizing debt collection services is the approach they use, so we can divide it into two categories: amicable and legal.
Approaches of Debt Collection Services :
One aspect that impacts categorizing debt collection services is the approach they use, so we can divide it into two categories: amicable and legal.
Amicable Debt Collection Services
Amicable collection service refers to any non-legal actions the agency performs to recover your debt so it may include consultation, analysis, contact with the debtor, negotiations, and so forth.
Some debt collection agencies offer integrated services with both amicable and legal procedures, while others specialize in only one of them.
Legal debt collection services
This type of service is offered by collection agencies or law firms, the debt collection attorney is responsible for performing any legal action in the process of the debt recovery.
This legal service includes sending a legal notice to the borrower or taking any court proceedings.
The Size of the Debt :
We can classify collection services depending on the size of the business and debt because large firms have different requirements from small ones.
Debt Collection Services for Small Business :
While some collection agencies have a minimum extent of claims to accept working on it, others offer a specialized service for small businesses that require certain experience to handle many debt claims at the same time, in the shortest time frame and in an amicable way because small companies usually need to maintain good relationships with debtors.
Eventually, “debt collection services” refers to a wide range of collection services, so before you hire any agency make sure that they have enough experience in the type of collection service that you require. You can decide this through the analysis of many aspects of your business, the debtor, and the debt itself.