National debt recovery

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eCollect support team

National debt recovery, also known as “nationwide debt collection” represents the process of collecting default payments and past- due debts on a local level within the boundaries of one country. This process is implemented by specialised companies, commonly familiar as national debt recovery agencies, or nationwide debt collectors. The national debt collection agencies specialise in collecting overdue payments, where the debtor hasn’t made the payment or if he has, it is reduced and not the full amount. Apart from the international collectors, which focus only on creditors with international business, offering different types of online goods or services, national recovery agents will only collect delinquent payments within their country of operation. Although the nationwide DCAs’ (Debt Collection Agencies) services might be paid, it is financially proven that using a recovery agent is more cost- effective and less time- consuming, than using creditor’s internal subdivisions for local debt recovery.


Process of National debt recovery

The nationwide debt recovery originally begins with the creditor. He may choose to deal with the collection process by using his company’s internal collection department (the so- called first- party collection agencies), or rely on the help of a national debt recovery agency (also known as third- party debt collection agencies). There is a third option, where the creditor might decide to sell his bad debts again to a third- party, in this case known as a “debt buyer”. The debt buyer pays the creditor a fraction of the original default amount and becomes the official debt owner. From then on the debt purchaser owes the right to collect the debt from the debtor not on behalf of the original creditor, but on behalf of the same debt collection agency that purchased the default profile.

If the creditor chooses to use a national debt recovery agency, the next step is to send the agency all information about debtors’ profiles. The DCA will then initiate the collection process. Local and nationwide debt collectors start with a tracking process and multichannel communication in order to trace and contact the subject of debt. This is done by the means of calling, texting, voice mailing, reminder letters and emails, contact via Skype, etc.

If the debtor, after being contacted by a local DCA, agrees to pay the outstanding debt amount, then the process ends and the local debt recovery agency successfully collects the debt. But the collection process continues when the debtor, for some reason or other, does not settle the debt. The reason might be inoffensive, where the debtor simply forgot to answer the letter/email, or he never received any; OR he might deliberately avoid paying the debt- when he doesn’t have sufficient financial funds to pay the amount, etc. In both cases the nationwide debt recovery agency will try to settle a payment plan that will suit the debtor.

Such debt recovery agents can also visit the debtor in his property. If the subject of debt has no funds to pay the amount due, the agent can offer him to sell some of debtor’s belongings in order to settle the debt.

The collection agents also send written reminders parallel to the face-to-face or by- phone process. Such letters are official and are also known as “letters of demand”. Depending on the scale of process, the letter can consist of only friendly reminder including the debt collection amount or a harsh collection text, informing the debtor that unless a payment is made within a specific period of time, the collection agency will proceed with legal actions.

All above are considered as pre- legal actions. If the mentioned turn to be not effective, court actions take place. The national debt recovery agency is obliged to send a final informative letter to the subject of debt, notifying him that legal actions have taken place from a specific date. From this moment onwards, the legal court undertakes the debt recovery. During the court process the debtor can still pay the default amount. If he does so, the legal actions will be terminated, but the bad credit report will still present in debtor’s credit file.

National debt recovery agencies operate on a nationwide level and their actions are strictly regulated by their countries’ internal laws and also by special acts and international agencies. Such acts and regulations are: the Federal Trade Commission- FTC (
http://en.wikipedia.org/wiki/Federal_Trade_Commission
and
http://www.ftc.gov/
) for agencies operating in UK & Wales; the FDCPA- Fair Debt Collection Practice Act, which is part of the Federal Trade Commission (
http://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text
)- valid for the United States of America; the Consumer Protection Act 1987- CPA (
http://www.legislation.gov.uk/ukpga/1987/43
) and the Administration of Justice Act 1970 (
http://www.legislation.gov.uk/ukpga/1970/31
) both for United Kingdom; the Consumer Financial Protection Bureau (
http://www.consumerfinance.gov/
) for U.S., and many others. These acts regulate not only the debt collection agencies’ activities and rights, but the debtors’ as well.

Each nationwide debt recovery agency has its legal representatives (bailiffs and lawyers) positioned in its country of operation. These representatives are familiar with the local laws and make sure the collection process is done in accordance with specific legal acts. As the nationwide DCAs have to promote legal and ethical behavior, they do not use harassing or violating methods and do not provide debtors with false information as this is considered as a breach in the law and legal acts.


Used literature & external links

http://www.stepchange.org/Debtinformationandadvice/Whatyourcreditorscando/Debtcollectionagencies.aspx
 

http://www.wisegeek.com/what-is-the-debt-collection-process.htm
 

http://www.acainternational.org/compliance-fair-debt-collection-practices-act-13186.aspx