Debt recovery service

Helene Mueller
eCollect support team

A debt recovery service indicates the process of collecting a debt amount owed to a first party (creditor), which has to be recovered from a second party (debtor). Such services can be performed by a third-party debt collection agency (outside the creditor’s organisation) or by a first – party DCA (operating within the creditor’s organisation and part of the same company). Debt recovery services also consist of a detailed plan how the debts will be repaid and how the default amounts will be collected from the subject in debt.

Debt recovery service list

There are various collection procedure services offered by debt recovery agencies:

  • Accounts receivable: this debt recovery service describes the legal claim of enforcement for payment. Usually the DCA use different forms of invoices sent to their customers’ debtors for payment to be made within a specific time frame, indicated in the contract between the first party (the creditor) and the second party (the debtor subject);
  • Sales ledger management, which is part of the debt recovery services’ package;
  • Insolvency debt collection recovery services, which are represented by strict insolvency laws, different for each country. E.g. for United Kingdom the insolvency debt collection is regulated by the United Kingdom Insolvency Law, which consists of number of UK insolvency acts and regulations (see;
  • Credit analysis & credit checks: the debt collection agency evaluates the applicant’s loan request in order to determine whether the borrower will live up to his obligations or not, and calculates the possibility of bad debt formation (source:;
  • Tracing services and enquiry agents: which facilitate the recovery process by locating the debtor and sending an agent to recover the bad debt. The contact between the agent and the debtor is important because it can lead to acceptable arrangement concerning the debt recovery. The objective is to avoid court proceedings, if possible;
  • Enforcement debt collection service: enforcement agents owe the legal right to locate the debtor and confiscate his belongings in order to settle the debt;
  • Close contact with the debtor: During the period of the subject’s delinquency (until the debt has been cleared), the recovery agency sends constant reminders in the form of letters, emails, contacting by phone, voicemails, etc.
  • Bad debts clearance debt recovery services: A DCA uses sophisticated strategies developed for the successful collection of bad debts in order to contact the debtor and clear bad debts and defaulted profiles;
  • Credit control & credit management services: Credit control and credit management serve a dual purpose- increasing sales revenues and minimising the risk of bad debts (ext. link 1). Credit control is the system that “prevents the business from becoming illiquid due to improper and uncoordinated issuance of credit to customers or even lending in a Financial institution” (ext. link 2). These debt recovery services are essential for each business to plan and focus on an excellent credit strategy and avoid formation of default payments. This technique helps in reducing costs and increasing profits within the creditor’s company. Debt collection agencies, which provide credit control services, usually offer training within their client’s organisation as well;
  • Debt compliance it represents various legal measures and actions taken to ensure that the second party (debtor) makes efforts to repay the bad debt/default payment (ext. link 4);
  • Solicitor legal process services & litigation process: after unsuccessful pre-legal process, the legal process takes place. Here the debt collection service can be paid, partly free or completely free of charge, depending on the collection agency’s company policy. If the DCA requires payment for the legal services, the payment is usually done prior to the beginning of court actions.

Types of debt recovery service

A debt collection agency broadens its default recovery service list according to the different kinds of debts, such as:

  • Commercial debt recovery (B2B recovery: Debt collection agencies which offer such default recovery service, are certified by different debt collection acts, e.g. in USA the DCA are regulated by the Commercial Collection Association regulated by the CLLA (Commercial Law League Association), see also ; in UK this type of debt recovery is regulated by the Late Payment of Commercial Debts (Interest) Act 1998 Order 2000 (ext. link 6);
  • Consumer debt recovery: The consumer debt is the outstanding debt’s amount of consumers;
  • Healthcare debt recovery: A healthcare debt also refers to medical debt. It occurs when an individual cannot afford to cover different health care costs and the related expenses;
  • Education debt recovery: The education debt is also known as “student loan debt”. This is the so-called “good debt”, as its purpose is to help students with their university expenses;
  • International debt recovery: some collection agencies operate on nationwide base and offer worldwide debt collection service list.

Used literature & external links