The collection of debts is often done through debt-collection agencies, solicitors or independent debt-collectors, debts that are referred for debt collection are at least 60 days past the due date.
Agencies on behalf of their clients seek to collect these debts then remit to the original creditor, with the creditor paying a percentage, typically between 25% to 50% of the amount collected to the debt collector.
Debts of all types are recovered by debt collectors: business, credit cards, personal, student and bank loans, hire purchase loans, they will collect for utility companies such as unpaid telephone and electricity accounts.
Reputable agencies/collectors having done their due diligence will only collect debts that are within the statute of limitations, this varies by state, often specialising in the type of debt they recover, for example they may only collect delinquent debts that are not less than $500 and or no older than 2 years.
If a debt is too old, being outside the statute of limitations, debt collectors won’t consider this a viable debt for recovery.
Phone calls and letters are typically used to make initial contact with borrowers using the information provided by the creditor, where contact cannot be made the debt collector can engage a private investigator or investigation agency to gather further information. Debt collectors will also conduct an investigation of the debtors’ assets through various searches, to determine a debtor’s ability to repay the owed amount
A debt collector has to reply on the debtor repaying the debt owed and where there is difficult to collect debts, negotiating settlements with customers is very common, the amount negotiated in most cases is less than the amount owed, but still considered a win. Another way to recover an amount owed is to obtain a judgement, whereby the court orders the debtor to repay a debt to a creditor. Debt collectors must take the debtor to court before the statute of limitations runs out, and are then able to garnish wages or bank accounts. Even with wining a judgement the debt can still be very difficult to collect, this can mean along with the levies on bank accounts and wages, the debt collector can enforce the sale of an asset or placing a lien on property.
Referring to a lawyer who can file lawsuits against an especially problematic customer who has repeatedly refused to pay is likely to get a favourable outcome and can be the best option for the debt collector.
Debt collection is a process of investigation, negotiation and communication to amicably work with debtors to repay the debt owed in full or with a plain to replay over time.