If you have explored the world of debt collection, you will know that there are a lot of unique terms and phrases used. But, do you know what they mean?
Debt Collection Terms You Need to Know
- Business Debt Collection: Business debt collection refers to when a business instructs a debt recovery agency, such as Cobra Financial, to recover a debt from another business.
- Bad Debt Ratio: This ratio compares the percentage of unrecoverable debts, compared to the total number of sales.
- Commercial Debt Recovery: Commercial debt recovery refers to the recovery of debt using commercial late payment legislation, a service Cobra Financial provides.
- Bad Debt: This is the money owed and not received, or money that’s unlikely to be received, after a debt collection agency has attempted to recover the funds. A bad debt can usually be written off against taxable profits.
- County Court Judgement or CCJ: A County Court Judgment, or a CCJ, is given after a successful debt recovery claim has been taken to court. A CCJ enforces the payment of a debt if it’s not paid within 14 days.
- Debt Collection Agency: Cobra Financial is an example of a debt collection agency. We are a third party that’s employed by a creditor, and our role is to collect unpaid debts from debtors.
- Debt Recovery Agency: Like a debt collection agency, a debt recovery agency recovers unpaid funds from debtors.
- Enforcement: Once a debt recovery claim has been successfully made, enforcement can be used to recover the debt. This includes actions such as using a bailiff, an attachment or earnings or a charging order.
- County Court: There are various ways of collecting debts via the courts. For example, the small claims track is for straightforward claims up to a value of £5,000, whereas the fast track is for claims up to £15,000. For larger claims, there’s the multi track option.
- Late Payment of Commercial Debts (Interest) Act 1998: This allows creditors to claim compensation and interest for unpaid commercial invoices, as well as third party recovery costs.
- Long Term Debt: A long term debt is one that’s not due to be paid for at least 12 months. These are not usually taken into account during small business debt collections.
- Secured Creditor: A secured creditor is someone that provides an asset to secure a loan or debt. If they fail to repay the money owed, the asset can be released as a form of repayment.
- Small Business Debt Collector: A small business debt collection is an agency that specialises in recovering low value, small debts. This usually involves recovering debts from customers of small businesses.
As you can see, there are a lot of debt collection terms out there, some of which can be confusing. This is why it’s also beneficial to hire a debt collection agency, such as Cobra Financial, as we can handle the complexities for you. Contact us to find out more.
