Debt recovery software

Helene Mueller
eCollect support team

Debt recovery software defines the automated system of debt recovery, used by every DCA (Debt Collection Agency). This software is generally known under the name debt collection API, which stands for Application Programming Interface. When a creditor decides to hire a debt agency, which will proceed with the collection process and will recover delinquent amounts on his behalf, the DCA installs its specialised debt collection software. With its help, the collection operation becomes easier and less time-consuming. The API is planted in creditor’s finance system and all debtor’s profiles and details become visible to the collection agency. This exchange integration process saves time and funds to both DCA and lender. The debt recovery software provides transparent collection process, where the creditor can monitor the system progress throughout the whole recovery course. That is why hiring a debt collection agent and the usage of such software is preferred by many creditors. Although dealing with debt recovery internally appears as a cheaper option for creditors, a lot of lenders go for hiring a DCA offering default recovery software, as the second option is more successful. Debt collection software can be designed to serve not only consumer creditors, but also corporate lenders, which means the software is applicable to both individual and commercial debt recovery.

Main components of debt recovery software

Each debt collection software consists of an API. As the software system represents data transfer between debt collection agency and creditor, the API is widely known as a software-to-software debt recovery interface. If a lender decides to use a DCA, the agency will take care to provide a professional programmer to install the special DRS (debt recovery software). After the installation of the DRS, the data transfer begins immediately, which expedites the whole debt collection process.

 Such debt collection software generally represents a data storage virtual department and a guideline manual for the creditor. After the API installation, the lender has full access to DCA’s shared system folders and information. As a lot of creditors are concerned about losing control over the collection process, this sharing software has a purpose of transforming the debt recovery into a clear operation.

The debt recovery software provides data privacy for both consumer (debtor) and creditor. The system information, exchanged between lender and the collection agency is strictly confidential, as both the creditor and the debtor fall under special data protection laws. When it comes to data and personal information, DCAs have to comply with different acts, protecting debtor’s rights as a consumer. In UK such regulation is the Data Protection Act 1998 (ext. link 6), the Office of Fair Trading; for Germany the Federal Data Protection Act is valid (the Bundesdatenschutzgesetz- BDSG); Protection of Personal Data, valid for the whole European Union (ext. link 7); the Fair Debt Collection Practices Act for US; etc.

A standard debt collections software system usually consists of different features, regarding tracing the debtor, continual monitoring, sending automatic but personalised reminders and letters of demand to each consumer (debtor), etc. The software maintains and updates information about debtor’s profiles, address of living, occupation, financial state, credit card report (if any) and others. A DRS also track subject of debt’s account balance and remembers due dates, after which a reminder has to be sent.

Complementary features of debt recovery software

Some debt collection agencies will provide such debt recovery software for free. They will install it in creditor’s system without requesting payment. A DCA can decide not to charge the lender, even if the agency continues to serve the creditor and the collection software remains in creditor’s company’s system. This means the collection agency will continue to monitor past debtors’ profiles and screen future partners and consumers on behalf of the original lender.

Maintaining the debt collections software can be free of charge, because some debt collection agencies choose to request their commission fee not from their client (the original creditor), but from the debtor instead. Such option is not regulated by law, and it depends completely on DCA’s policy and terms and conditions. Some agencies, on other hand, will install the recovery debt software for free, but they will require payment to be made by the creditor, if he wishes a continual after-collection auditor or advisor.

There are types of debt recovery software, which consist not only of debt collection functions, but also of litigation option services. Such system is known as collection debt software for legal attorneys. As debt collection solicitors differentiate from a standard debt agent, they also need different software options and functions. A DRS for solicitor’s usage provides the standard debt collection software functions, but also automated legal letters, like letter of demand, letter before action, even court summons. Debt collections software can consist of court and legal document management, separate accounting system, official arrangements for various payment plans, etc.

Recovery debt software can even provide preparation of negotiation plans, separating affordable monthly payments for each debtor. This can be very convenient option for a subject of debt, who cannot afford to settle the debt in full with one single payment. Depending on debtor’s monthly income and wage, the system will analyse and estimate the most convenient monthly monetary payment, which a subject of debt will be able to afford and clear the debt in full during a specific period of time.

Used literature & external links