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Debt collection is a reality that every business and individual should learn to live with. In a world where borrowing is the norm of the day, there is no doubt that there will come a time when debtors and creditors will be at crossroads, and collection will be inevitable. Because of that, there are several ways through which debt collection specialists can recover the owed amount. However, they have to be legal to ensure justice for all parties. The following are seven legal practices and methods for debt collection agencies.
1. Sending Friendly Payment Reminders
When the due date is approaching, and there is no intention of payment from the debtors, you should send them a friendly letter letting them know that the deadline is approaching. This letter aims to establish communication and get their communication about the situation. Be sure to be kind in this letter because you are persuading them to pay.
2. Sending Overdue Payment Reminders
If the friendly letter did not yield any results and the date has passed without payment, you have to make another move by sending them an overdue payment reminder. Let them know that they have taken more than the agreed time, and they should make plans to pay. At this stage, make sure that you let them know about the penalties that they are likely to face if they do not pay on time.
3. Giving a Final Notice
A final notice serves as a reminder that everything has been made to get the debt from the client, but nothing has been forthcoming. You have to let them know that your company will take action based on the terms of the debt. You may want to let them know about the waivers and other leniencies that are likely to be awarded to them if they pay at this point. Be sure to clearly state the position of your company and how they should handle everything.
4. Contacting the Debtors Directly
At this point, you have been quite patient with the debtor, but they seem not to respond to your communications. Even if they did, they probably did not pay the amount they owe, and therefore, you have to contact them directly. A phone call will be the best option in this case as you will get first-hand information from the company. In addition to that, you will get a personal response meaning that it will be easy to plan for the way forward.
5. Writing a Formal Demand Letter
Remember that contacting the debtors does not count as a legal process because there is nothing written about it. Because of that, you have to write a formal letter indicating your intentions to recollect the debt. Let them know that you have a process through which you do such things, and ask them to comply. You may want to extend a favor to them by asking them to pay subject to certain conditions. Always be professional when writing these letters.
6. Hiring Debt Collection Professionals
Once the deadline given in the formal letter expires, it is time to get into touch with a debt collection agency. This is when you engage professionals who know all the right things that are related to collecting such debts. They will analyze the situation and take over the process. They will also determine the best way to repossess the debt, including auctions.
7. Dealing With Excuses and Other Eventualities
You have to know that during the debt collection process, you will meet too many excuses as the debtor tries to evade an auction. They will also try to fight back through the courts and other arbitrary bodies. You should be prepared to handle such challenges because the most important thing is to ensure that the money you loaned to them does not go down the drain.
In a nutshell, debt collection agencies are justified in their effort to recover money that debtors are unable to pay. However, they have to do it properly and professionally so that everybody gets justice. In addition to that, they have to explore all options before they finally resort to drastic actions such as auctions. It is always good to follow a transparent process. When you do it right, there will be no complaints at the end of the process.