Debt recovery progress
Table of contents
Progress debt recovery refers to the debt collection process, performed by a private debt collection agency (DCA) or by the original creditor himself. In order for a debt collection to be considered as progressive as a financial and law term, it has to be not only ethically compliant but also legal. A debt recovery agency has to take into consideration different acts and laws on a local and international level (if the DCA carries out nationwide debt collection) and also to be familiar with these regulations and consumers’ rights specified inside. Generally, a progress debt recovery is observed, when the subject executing the debt collection process complies with country laws and has executed ethical and non-harassing debt recovery operation including pre-legal methods, legal proceedings and court actions.
Progress debt recovery process, tools & methods
There are various tools and strategies used by debt collection agencies in order the delinquent payments to be promptly collected and as soon as possible. Private third-party debt collectors employ different systematic methods in specific sequence. Generally, when a failed payment appears in creditor’s financial system, the lender will mark it as written-off and hire a professional debt collection agency to continue with the recovery process. The creditor will then transfer all debtor’s data to DCA’s system. If the information is sufficient, the collection agents will start with the debt recovery. If there are details missing, e.g. no address of the debtor or a changed one, then the debt collection agency will use its first progress debt recovery method-tracking and tracing the subject of debt. This operation is done with the help of specialised tracking agents. After the debtor has been located, the collection process begins. The DCA will start sending different reminding letters to the indebted subject and will use various communication techniques, such as phone calls (within accepted time-frames), emails, letters by post, etc. The tone of the first reminders is usually friendlier. With every next letter or phone call the tone will become firmer and will emphasise on immediate payment.
The next step of the progress debt recovery is personalised in-house visits to debtor’s property, performed by standard debt collectors (during the pre-legal process). Standard agents do not have the authority to forcefully seize property and goods, so they will try to negotiate a convenient payment plan with the debtor. The negotiation can include new terms for debt settlement or debt management. If both the subject of debt and the creditor agree to the new terms, a new contract is to be signed and the debtor has to make either small monthly payments (i.e. instalment payment plan) of the full debt amount, which is known as debt management; or can transfer one single monetary amount, which is reduced and represents part of the total debt sum (debt settlement). Once the debtor has repaid the reduced amount, the rest of the default is considered forgiven and the debt is cleared. Progress debt recovery agencies can even offer the consumer debt consolidation as a repayment option, which means borrowing one bigger loan to cover other smaller ones. This last loan is usually secured debt and followed by a collateral such as an estate property.
In the United Kingdom and Wales, progress debt recovery can include a proposal for an Individual Voluntary Arrangement or Company Voluntary Arrangement (if the debtor is a business corporation). These agreements are alternatives to filing bankruptcy. As the bankruptcy severely harms debtor’s credit report, the IVA or CVA is a more convenient option for a subject of debt. Both voluntary arrangements legally bind both creditor and debtor. The Individual Voluntary Arrangement is similar to both debt management and debt settlement, as it offers a prospect for both reducing debt amount and convenient repayment divided into equal monthly transactions.
Debt collection agency can even involve professional debt solicitors in the progress debt recovery. These attorneys are either part of the DCA or act as private law firms in return of an hourly interest to be paid. Debt recovery lawyers are also known as specialised collectors (along with bailiffs and enforcement agents) with legal authorities. During personal visits in debtor’s estate, they can confiscate debtor’s belongings, if needed, in order to settle the debt in full.
Debt collection solicitors will transfer debtor’s case and profile to court if legal actions do not result. From then on the issue is considered as part of a law trial. The DCA and the creditor will no longer try to contact the subject of debt. Instead, court representatives will address written documents to the debtor informing him about an upcoming trial. Court actions lead to judgement order entry, small claims court proceedings, enforcement, wage garnishment, or even seizure of real estate.
If the information provided by the creditor has been correct and the consumer is truly in debt, the court will legally force the subject of debt to repay the lender the monetary sum he owes. When the consumer transfers the amount due, the debt is considered as cleared and the case is closed.
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