Nowadays the world of easy credit often leads to many people defaulting on their debts. When creditors are unable to make payment and funds are long overdue, companies to whom money is owed need the assistance of services that can help collect such dues.
Collection of dues
Known as a debt collection service, usually it is either a firm or a team of professionals who take on the burden of collecting the money that people owe on behalf of their clients. Debt recovery is done by account, credit or debt collectors. Some companies have a debt recovery department, which takes on the responsibility of recovering money from customers whose payments are long overdue. In other cases, companies hand over their requirement of collecting money to collection agencies.
How it works?
When a creditor is unable to procure payment that a debtor owes through normal billing cycles, there is a period of grace given, after which the account is handed over to the debt collector. An in house department is often given the responsibility of collecting such debts. In other cases a creditor company will transfer the account to an independent company which works as a collection agency. Such companies usually specialize in commercial collection services. The collector who takes up recovery cases mails or calls to the debtor to seek reasons for nonpayment. The debtor might dispute the bill or express dissatisfaction about the services rendered. In such cases, the credit collector might first refer the case back to the client company or the concerned customer care department. Once the bill terms are deemed valid and fair, the collector will then follow up with the debtor in order to ensure that payment is made.
A debtor might be willing to pay, but experiences difficulties in finances make the payment. In such cases, a debtor can offer a payment plan. In case a debtor disputes the bill and refuses to pay the pending amount, the collector will then escalate the issue to an attorney. At such a stage legal action is taken up. In case the unpaid bill was for merchandise such a vehicle being bought on loan, the vehicle is then repossessed. The collector needs to track debtors who might not be available at the address provided or the contact details given. Usually debtors who abscond need to be traced and neighbors interviewed or workplaces visited in order to track down debtors. All such work and more are done by a debt collector or agency on behalf of client companies. The payment terms or arrangements differ for debt collectors.