When all in house efforts fail to recover a debt, they are handed over to a debt recovery agent or collection agent. This article discusses how the latter functions and recovers bad debts.
Debt recovery agents usually contact the defaulting individual or company through letters initially followed by phone calls. They may use automated telephone systems that keep track of the calls or computers with software that periodically dispatches reminders to the debtor. If the debt is small, phone calls may be too expensive and only letters may be sent. If all the normal mode of debt collection fails to yield any result, the collection agency may resort to legal recourse and approach a court to settle the dispute.
Debt recovery agents have reputation of using intimidation and harassment to recover bad debts in the past. But with the passing of Fair Debt Collection Practices Act in the U.S., debt recovery is done in a more humane manner. This act prescribes that the debtors must be treated in a fair way and that they should not be threatened or bullied. Also debt recovery agents have realized that it is better to work with the debtors and discuss means of repaying the loan with payment plans and other options which has greater chances of success than coercion.
When all means of persuasion have failed, debt recovery agents can be approached for debts that are overdue by at least a month. The pros and cons of handing over the case have to be thoroughly analyzed depending on each individual case. But once it has been determined that there is no way out, the bad account should be handed over to debt recovery agent at the earliest as the chances of recovery is more when the overdue period is less. Once handed over, the debt recovery agent handles all the correspondence and details of settlement of the account. Some pointers to a debt going bad and when it is time to hand it over to a debt recovery agent are listed below:
- The payment terms are not adhered to by the customer like frequent postponement or delayed payment on frivolous grounds
- The customer fails to answer reminders through phone calls and / or in writing or secretly changes the contact telephone no and/or address
- The customer denies owing any money in spite of written records
- Baseless complaints are made by the customer repeatedly regarding the quality of product or service whenever asked for payment
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
I've recently been contacted by a collection ...
By: raymo1207 | 14-08-2008
I've recently been contacted by a collection agency regarding a credit card from 1992. It isn't listed on my credit report. I purchased property 4 years ago, and when I did, I paid off all outstanding obligations prior to purchase. I now have pretty good credit. It has been so long, I am not sure if it is valid or not. Can a collection agency try to collect on something from 16 years ago? I'm stumped, as I've worked hard to maintain good credit.
Q&A Powered by:
Latest Non-Fiction Articles
Book Marketing: the Day That is Different for Your Career Strategy
By: Rosey Dow | 06/10/2008
Make an informed decision about the direction of your writing career--print or online, or both.
In the Lap of the Gods 22
By: Steve Morgan | 05/10/2008
For those who have read the other 21 chapters
A Week in the Life of the Single Working Mother
By: Karen Dosw | 03/10/2008
A humorous article about a week in the life of one South African, single mom with two adult children and two little ones.
Why You Should Write for Free
By: Deborah Owen | 01/10/2008
Write for free? I can hear you saying, “Are you nuts?” Write for free, so you can get paid. Read more inside.
Why You Should Write for Free
By: Deborah Owen | 01/10/2008
You asked if they had a job opening. They said no. They told me “no”, too, but I got the job anyway. Read more inside.
Becoming a Reporter is Easy
By: Deborah Owen | 01/10/2008
Do you want to be a reporter? It’s a great way to break into print, and the jobs aren’t that hard to get. Read this article to learn more.
Writing it Down
By: Galina Nemirovsky | 29/09/2008
Lately I’ve developed a compulsion to write everything down. Stringing words together and composing sentences in the shower, I want to write it all down – remember it – capture it. I stare at people in the subway and craft their character descriptions in my head...
The Modern Lily Tomlin
By: Galina Nemirovsky | 29/09/2008
I’m waiting in a conference room that smells like the corner of career aspiration and stale office carpet. The overly heavy and overly bitter receptionist has a voice that is piercing through the makeshift conference room with walls that only go up about 7 feet. Like an annoying hiccup, she keeps repeating “Good morning, Hudson. Your name? Hold please.” Over and over again. She is an extra large version of what the rest of the world has automated already.
More from Tristan Andrews
What Are Collection Agencies?
By: Tristan Andrews | 08/05/2008 | Credit
When you hear about collection agencies, do you think about commercials like the one in which someone is avoiding the phone because they're dealing with a mountain of debt?
The Difference Between Good and Evil Concerning Collection Agencies
By: Tristan Andrews | 26/04/2008 | Regulatory Compliance
When you are dealing with collection agencies the first thing to understand is that not all of them are like the ones you see in the debt counseling commercials. Some are respectful of your rights under the law.
Hints and Tips For Finding The Perfect Elementary Tutor
By: Tristan Andrews | 25/04/2008 | Education
Whether you're looking for a tutor for your second grader in science or your sixth grader in reading, you'll need to know how to make the best decision. There are many things to consider when you're looking for a tutor.
The Benefits and Cost of Tutoring
By: Tristan Andrews | 25/04/2008 | Education
The basic benefits of tutoring for society are that it improves academic skills, builds self esteem and confidence, develops positive attitude towards school, offers positive role models, improves social skills, slows down truancies and drop out rates.
Will A Tutor Really Help My Child?
By: Tristan Andrews | 24/04/2008 | Education
When your third grader comes home with a C in math, after you've tried to motivate him by paying him for good grades or taking him to the zoo, and you've tried every other bribe you could think of that appealed to him and still it didn't work. You are indeed a frustrated parent.
Collection Agencies and the Law
By: Tristan Andrews | 24/04/2008 | Regulatory Compliance
Collectors have to study and pass tests with their companies in many cases before they become collectors. They know the laws that they legally must adhere to as collectors and they can actually be fined for breaking the law.
What to Do About Collection Agency Harassment
By: Tristan Andrews | 24/04/2008 | Regulatory Compliance
When the collector calls you an excessive amount of time per day that is one form of harassment. This harassment can be stopped. You have protection under the law against certain abusive tactics that some collection agencies employ.
Should You Get A Tutor for Your Preschool Child?
By: Tristan Andrews | 24/04/2008 | Education
When you start considering what your child is capable of learning - how his mind is like a sponge or an empty computer disk that is going to be filled with something, you begin to wonder if you should get someone more qualified to teach him.
Writing 
