Introduction to Commercial Debt Collection 2015
Debt collection refers to the methods that a company employs to recover its debts from another company or an individual. Generally, debt collection is employed when debt remains unpaid for a long tim. Commercial debt collection refers to the cases when the debt is payable by any business. Businesses entrust the job of collecting debt to debt collecting agencies, but some big businesses have a separate department of their own for this aspect. Agencies collecting debts seriously follow various means and policies for collecting liabilities.
When a business or an individual fails to clear its outstanding payments within a specified time, the company owning the debt would follow-up the collection of its dues. Before appointing a third-party for collecting the debt, the company would normally issue a notice to the debtor. The most widespread kind of debt collection pertains to delayed payments against credit card dues. Agencies entrusted with the job of debt collection are reputedly aggressive, as they get paid by their principals only after they succeed in collecting the debts. This fact is substantiated by the large number of lawsuits filed against such agencies for harassing the debtors.
Commercial debt collection particularly refers to collecting debt payable by one company to another or a financial organization. The practices employed for the recovery of debts often depend on the assets and resources of the debtor, plus the kind of business it may have. A number of companies that often need the services of debt collectors would also employ a debt collecting lawyer, who would represent them right through the process.
A third-party entrusted with the job of collecting debt would start the process of recovering the debts by calling on the debtor in person or on phone and by sending warning letters. Nevertheless, the method that a debt collector may apply depends on the prevailing legislations in that country or state. The collection of commercial debts is more difficult, compared to retail or consumer debt, and usually collectors try finding a strategy that is mutually acceptable to all concerned. They frequently call on the debtor, encouraging them to reach a settlement. If all such efforts fail to bring the desired results, a lawsuit is filed.
The reason for debt collecting agencies earning a bad name is that a number of debtors believe that they have been unduly harassed by the representatives of the debt collector, who make frequent calls and don’t hesitate from making verbal or written threats. This might have been the case earlier, but now there are laws in place that allow the debtors to defend themselves against such harassments. Though the debt collector is permitted to access the debtor through phone calls, letters and fax or telegrams, they are debarred from doing so in an intimating manner. Further, they are not permitted to hassle the debtors through frequent telephone calls. They need to prove their identity, and to convey straightway the intent of making telephone calls.
There are many ways for collection of debts, varying with the kind of debt, plus state legislations. One practice followed by debt collection agencies is to purchase a debt at discounted prices from the company having an outstanding, and then follow-up with the debtor to recover the full amount, and thus book some substantial profit in the process.