Debt collection has been something that has been around since the era of bartering. It goes as far back as ancient civilizations where the debtor and their family were forced into slavery until they paid back what was owed by them. Sometimes this type of slavery would continue for generations until the creditor felt that the debt had been paid off. Debt collection is the attempt on the creditor’s part whereby he pursues his customer that has not paid back his loans and credit. Debt recovery, on the other hand is where a third part is employed to get the money back from the customer. There are various reasons why the debtor may fail to pay such as an over commitment on their part or due to an unforeseen circumstance or may just be due to health reasons. The process of debt collection starts after 30 days from the due date of the bill as that is when the credit bureaus are alerted. During this time the creditor may try to contact the customer through phone or email to get their payment. After the 30 days the creditor hands over the debt to another department within the company that handles getting back the debt and have the authority of reporting your delinquency and eventually shutting down your credit card account. After 180 days, the debt recovery agency comes in where the creditor usually sells his debt to the agency and writes it off his books. The creditor will send all the information to the debt recovery agency and the process will start with a demand letter being issued to the debtor. Telephone contact will begin in hopes of getting payment and if that does not work then the agency will resort to legal action and even lawsuits.
It is always a good idea for you to pay your debt as soon as possible so that the incessant calls and emails from collection agencies can cease and you can have some peace of mind. Even if calls stop coming from one certain debt collector, it is temporary as it means that your account is being switched to another agency. If you have outstanding debt on your credit account then it unlikely that the bank will give you any further loans. Some employers also may not hire you if you have unpaid debts and some landlords may also reject your application for a lease. When collections get older, they also affect your credit score and the sooner you pay your dues, the better your credit score. Even if you have a small collection, there is still a risk of being sued over what you owe and a lawsuit will lead to further degradation of your credit score. When you can afford it, it is always better to care of your debt collections first so that you owe money to less people and make your finances better.
However, not everybody is reliable and as a business owner you need to collect all your payments to keep your business running. Time is also of the essence as the older the debt gets the harder it is to collect it. Debt recovery agencies are well versed in the laws and offer you legal protection; they know who to sue when rights are violated. If you attempt to collect the debt on your own then there are certain legal risks that are associated with it so it is better to use an agency to take care of it. They have many years of experience under their belt and know how to coerce the debtors to pay. Their main job is to collect debts so that need to be good at it. They also offer flexibility in their programs of payment that can be model around your business. They have proper records as well of the contact that has been made with debtors and in case of an audit you will have the necessary documentations that you need. People also tend to pay faster when the debt recovery agency contacts them which will save you from the time and energy of having to do it yourself.