Your guide to debt recovery methods
Having outstanding debts is a frustrating matter that makes your financial situation completely unstable.
There are many debt recovery methods, one of the most trusted and professional ways is hiring a debt collection agency to assist you get your debts back.
Those agencies specialize in debt collection. They have experienced teams and effective tools that enable them to collect your debt professionally, at the lowest cost, and within the shortest time frame.
The different debt collection techniques can be summarized into five key phases: data gathering and examination, contact with the debtor, negotiations, and court proceedings.
Advantages of using a collection agency
You may try using many debt recovery methods that don’t yield good results, but the best choice for any creditor is to hire a professional debt collection agency since it has many benefits, such as:
- Debt collection companies have already built efficient systems for different debt collection cases.
- They have an experienced and dedicated team that has special expertise in solving complex debt matters.
- Choosing a good debt collection agency can save a lot of time and effort.
- It also gives the creditor the chance to concentrate on his business without being distracted by pursuing the debtors.
- Specialized debt collectors can tell you what is the best choice to recover your debt in amicable ways.
- They can negotiate effectively with the borrower to reach the best solution for you.
Data gathering and examination
When you hire a debt collection agency, they begin to use various debt recovery methods, but first they examine your claim to decide which tools will be effective for your case.
In this phase, the agency works on gathering a lot of data about the debt and the debtor besides other data about the available documents and many other factors that will essentially affect their work such as:
- The location of the creditor and the debtor.
- If there were any previous attempts from the creditors to recover the debt.
- The type of debt and if it is commercial or personal.
- The industry in which commercial debt is involved.
- The size of the debt.
- The age of the debt.
After examining those factors, the debt collector can choose the most appropriate strategy for your claim.
Contact With the Debtor
All amicable debt recovery methods can’t be done without direct communication with the debtor.
If the debt collector doesn’t have the borrower’s contact information, he will use different tools and databases to get accurate information about him.
Contact information may include the phone number, the email, or the address.
Notifying the Debtor
Once the debt collector has the borrower’s contact information, he commences his attempts to communicate with him amicably, which is a fundamental part of all debt recovery methods.
This may happen through a phone call, an email, or a letter. This step is a type of request for the debt and a way to comprehend why the borrower doesn’t repay the outstanding debt. If the debtor is responsive, he will explain the reasons for this debt.
Hence, the debt collection agency will have a clear understanding if he really can’t repay the debt due to financial troubles or if he doesn’t want to repay it and manipulates to avoid payment.
After this request, the company usually gives him a grace period to pay off the debt in full, it may extend to 14 days or a month.
Negotiations
Negotiation is the core of all the amicable debt recovery methods, negotiations mostly begin after notifying the borrower through a letter before action.
The nature of negotiations varies according to the determined goal and the responsiveness of the debtor with regard to his financial situation and whether he can repay the full amount of the debt or not.
If the debt collector makes sure that the borrower is unable to repay the debt in full, he may suggest other repayment solutions such as: spreading out the payment within a satisfactory timeframe for the creditor, debt settlement to reduce the amount of the debt to make it easier to be paid, or any other way for restructuring the debt.
These flexible payment options are usually satisfying for both the debtor and the creditor, but in other cases, the matter is more complex and the debt collection agency needs to start court proceedings to collect the debt.
Court Proceedings
Court proceedings are an essential part of debt recovery methods since debt collection has two sides, the financial and the legal side.
Most debt collection agencies don’t commence with legal actions but if they fail to handle the case amicably, it will be necessary to go to a more serious step.
The attorney starts with sending a legal notice to the borrower, this legal notice shows the seriousness of your request and it also includes the deadline for the debt repayment.
In the next step, the lawyer can pursue the court proceedings and file a lawsuit against the debtor to force him to repay the debt.
We can conclude that using a debt collection agency is one of the most successful debt recovery methods since they have the demanded expertise to handle complex debt cases through many organized steps that start with examining your claim and gathering all necessary data, then going to the most crucial phase, which is the direct contact with the debtor to negotiate with him and persuade him to repay the full amount of debt. Finally, they can take necessary legal action if the amicable solutions don’t yield success.