Debt collector actions

Helene Mueller
eCollect support team

Different acts and laws legislate what debt collectors can do and determine which practices are considered as legal and ethical, and which- as harassment towards debtor’s rights as a consumer and individual. Although most DCAs (Debt Collection Agencies) strive to comply with debt recovery laws, there are some recovery agencies that breach debtor’s rights. Debt agents’ main aim is to collect outstanding receivables and past-due monetary obligations. They can do this on behalf on the creditor who hired them to act on his part; or can recollect the defaults after they purchased bad debts from a lender. In both cases their purpose is to recover the amounts by all means, as in the first case (when representing the creditor) they receive a commission percentage for recovered obligations; and in the second they have personal interest in recovering the amounts, as they have purchased these amounts from the lender for a percentage of the total debt sum. When starting the debt recovering process, every debt recovery agency has to be clear about what can debt recovery agents do and which collection actions are not recognised as legal.

When a consumer or a business debtor is contacted by a debt recovery agency in accordance with his past-due payments, a borrower should know his rights and be conversant with debt collectors’ lawful actions as well. Although dealing with DCAs can be a stressful process for a consumer in debt, each debtor should be well informed about DCAs’ authorisations.

Recovery agents utilise different pre-legal and legal proceedings during the collection process. They are allowed to perform pre-collection tracing of the debtor, in case his location is unknown. Debt collectors can carry out this process by using all methods and information sources available, as long as these schemes are legal and accepted by law. When the collection begins, recovery agents will start contacting the debtor, while conforming with local or international laws (depending on the type of collection). In UK & Wales, for example, debt agencies can call, email and send letters to the subject of debt, but they cannot contact him via social networks, or send debt payment requests to his Facebook or Twitter profile.

Concerning the time-frame for contact, it is also regulated what can debt collectors do in regards to the calling hours. Usually DCAs are allowed to call the debtor between 8 a.m. & 9 p.m. within the standard working days. But if the consumer specifically notifies the agency that he grants them permission to contact him outside the specified frame, such calls will not be considered as harassment, once the debtor has given his approval. The same is valid for borrower’s workplace. Typically debt agents are not allowed to call the consumer at work, unless he has agreed to be called within this time.

Generally, forwarding a postcard to the debtor in relation to his monetary liabilities towards a creditor is strictly forbidden by law and otherwise is deemed as severe law violation. But if the postcard does not indicate the matter of the dispatch and does not clearly states that it is sent by a debt collection agency, it is not considered as an infringement.

When sending general reminders or official informative letters, stating forthcoming legal and court actions, debt collectors will politely but rigorously request payment from the debtor as soon as possible. This is not reckoned as harassment or insult, but represents the process of executing creditor’s legal right to claim debt amount reimbursement.

Regarding recovery agent’s rights of requesting commission fee, there are different regulations across various countries about what can debt collectors do and from whom they can demand their payment of interest. In UK & Wales, a collection agent has no right to insist on percentage payment from the debtor, unless the loan contract (signed by lender and borrower) specifies that when the consumer falls behind with payment, and the creditor transfers his profile to a DCA, this collection agency will request its interest from the subject of debt. Otherwise, if not mentioned in the agreement form, the recovery agency cannot collect its commission from the indebted subject. However, for residents of Germany, Austria and Switzerland, from the moment a lender transfers a debtor’s past-due case to a private agency, this agency is authorised by law to take its interest % from the indebted borrower, along with the full delinquent amount owed to the original creditor.

Debt collectors can also offer different repayment plans to the consumer in debt. If the individual is in difficult financial state, the creditor can sometimes agree to change the debt terms and pass these authorities to the agency, which represents him. The DCA will then negotiate with the debtor, providing different debt clearance plans, which will be more convenient for the borrower and the monthly payments will be easier to attain and in accordance with his financial condition.

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