How Does the Debt Collection Process Work?
If you are owed money by someone and they are refusing to pay, you might need to begin debt collection efforts. Debt collection is aimed at recovering any type of debt, ranging from unpaid invoices to someone failing to pay for a service. You can even use debt collection for outstanding loan repayments, commercial rent arrears and customers who are refusing to pay your business. There is a lot that goes into the debt collection process, but we have taken a look at how everything works below.
What is Debt Collection?
A lot of people make the mistake of assuming that the debt collection process is complicated, but it’s relatively easy to understand once you have the right information. There are various steps involved in the debt collection process, and this starts with unpaid debt. Once you have noticed an unpaid debt, you need to think about how you are going to begin the recovery process. This could involve chasing the debtor yourself, by sending letters and payment reminders. You might also need to make telephone calls or emails. Sometimes, a simple reminder is all it takes, but not always.
If you are no closer to receiving the funds that are rightfully yours, it’s time to send a letter before action. This is the first formal step in the debt recovery process, and it’s a warning to the debtor that you are planning to take legal action against them if they don’t pay. Oftentimes, this is enough to encourage a debtor to make the payment, as the threat of legal action shows them just how serious you are about pursuing payment. If this doesn’t work, you can take things to a small claims court, or by hiring a debt collection agency. Though a small claims court can be helpful, using the services of a debt collection agency tends to be a quicker and more effective way of recovering a debt. Plus, a small claims court can be costly and there is no guarantee of a quick resolution.
The world of debt collection can be complex, especially if you are owed a large amount of money or you have a debtor who is refusing to pay. Therefore we recommend seeking the help of a talented team of debt collection experts. At Cobra Financial, we offer a wide range of debt collection services, ranging from face to face debt collection to business debt collection, and from debt tracing to commercial rent arrears recovery.
With our experts on hand to help, there is no need to worry about managing debt collection yourself. You can hand everything over to us, knowing that your debt will be recovered quickly and effectively. There is no need for you to struggle with cash flow and finances, simply because you are owed money by a debtor. Get in touch to find out more.