Debt collection solicitors

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Debt recovery solicitors are legal practitioners authorised to participate in the debt collection process and to assist in debt recovery procedure. Involvement of such lawyers doesn’t always mean using court proceedings, as in many countries they are part of the civil litigation officials. Typically debt collections solicitors are either part of a DCA (Debt Collection Agency) or are private subjects, who can be hired by a recovery agency or by the original creditor. Debt recovery solicitors can serve either private or public sector clients, as collection agencies offer both commercial and consumer debt recovery services. They can also serve a DCA in a case where the same agency has purchased the debt and became the new credit owner.


Debt recovery solicitors in the collection process

Debt collection solicitors are a key part of the debt recovery process. In many cases, they are able to settle the debt and resolve the issue without using court actions. However, they are licensed to implement legal actions in order to collect bad debts or help a DCA to recover delinquent amounts. Their services are needed when there is a breach of the contract signed between the first party (original creditor) and the second party (the subject of debt); and when the original lender prefers to avoid court actions, as debt collections solicitors are the last resort before using court proceedings.

Debt recovery solicitors will contact the subject of debt after they determine the responsible party (the debtor), as they aim to establish early communication for easier debt collection. A debtor is also known as a “consumer”- a person in debt, obliged to pay the default amount of a bad debt owed to a first party (the original lender). Debt collection solicitors are legally authorised to use all types of collection methods, which typically include e-mails, phone calls and official letters (letters of demand, letters before action and final demand letters) concerning the unpaid debt.

Debt collections solicitors can also perform personal visits to debtor’s premises. They usually try to arrange a flexible payment option (agreement) with the debtor in order to collect the full debt amount. In the UK this process of mutual agreement is called Individual Voluntary Arrangement (IVA) and is part of the UK Insolvency Act 1986, Part VIII (
http://www.legislation.gov.uk/ukpga/1986/45/contents
). In Great Britain, such agreement is used when the subject of debt cannot provide debt payment in full or is in a state of insolvency. If the subject of debt denies paying the debt sum, the recovery lawyer can file a court suit against the debtor.

Although debt recovers solicitors are authorised to use different legal proceedings, including seizing debtor’s belonging, etc., they usually try to negotiate with the debtor in order to preserve the business relationship between the original creditor and the subject of debt.

If there are cases of bankruptcy or insolvency (for individual consumers) or liquidation (for commercial business debtors), the default recovery solicitors transfer the case to court in order to be legally determined and proved whether the subject is insolvent or not.

Debt collections solicitors usually participate in the collection of unsecured debts with no collateral following, such as student loans, medical and healthcare debts, debts deriving from the purchase of goods or services, membership default payments, peer-to-peer lending debts, different bills, income taxes, etc.

Debt collection solicitors- laws & regulations

Like debt collection agencies, the law regulates debt recovery solicitors’ actions as well. Debt collections solicitors have to abide not only collection agency’s laws but also regulations, concerning debt solicitors. In the UK, such debt lawyers act under the Financial Conduct Authority- FCA (
http://www.fca.org.uk/
).

If the debt recovery solicitors are part of a collection agency operating within the European Union boundaries, they follow different laws and acts: European Small Claims Procedure, ext. link 5; European Small Claims Procedure, ext. link 6; European Enforcement Order-
http://en.wikipedia.org/wiki/European_Enforcement_Order
; European Order for Payment Procedure, ext. link 7; and others. Collection debt solicitors also follow the Consumer Protection Act 1987 (for the UK)-
http://www.legislation.gov.uk/ukpga/1987/43
, etc.

The BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act) and other laws are valid for United States-
http://www.gpo.gov/fdsys/pkg/PLAW-109publ8/html/PLAW-109publ8.htm
. However, debt recovery solicitors are not under the FDCPA (Fair Debt Collection Practices Act), as according to this act, such lawyers are exempt from it when they are part of legal debt collection proceedings.

For Northern Ireland, there is a law under the name of “Solicitors (Northern Ireland) Order 1976” which regulates local debt recovery solicitors (
http://www.legislation.gov.uk/nisi/1976/582
). The full list of regulations for Northern Ireland can be found here:
http://www.lawsoc-ni.org/role-of-the-law-society/regulation/
.

In Canada, such regulations vary depending on the state. For Ontario the Collection Agencies Act is valid (ext. link 8).


Used literature & external links

http://en.wikipedia.org/wiki/Individual_voluntary_arrangement
 

http://www.investopedia.com/terms/b/bapcpa.asp
 

https://www.govtrack.us/congress/bills/109/s256
 

https://www.gov.uk/options-for-paying-off-your-debts/individual-voluntary-arrangements
 

http://europa.eu/legislation_summaries/consumers/protection_of_consumers/l16028_de.htm
 

http://europa.eu/legislation_summaries/justice_freedom_security/judicial_cooperation_in_civil_matters/l33190_en.htm
 

http://europa.eu/legislation_summaries/justice_freedom_security/judicial_cooperation_in_civil_matters/l16023_en.htm
 

http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_90c14_e.htm