Given debt recovery has a direct impact on your credit score, it’s considered to be a crucial process. If you’ve been approached by a debt collection agency, it indicates you’ve defaulted on a loan and are now behind on payments. These defaults are recorded to credit bureaus, lowering your credit score and perhaps jeopardising your future borrowing possibilities.

The debt recovery process has multiple parts and it’s crucial to know what to anticipate when you’re approached by a debt collector. Because financial debt is such a difficult condition, legislation has been enacted to oversee the debt collection process and protect customers from debt collection harassment.

Trying to collect personal debts such as money you’ve borrowed from a friend or family member requires caution and consideration. A monetary argument may escalate into something much more severe and devastate a close tie. eCollect has successfully helped a number of clients recover money owed to them without escalating the conflict between parties or having to go to court. Personal loans come with personal issues. The benefit of a third party working on your behalf is regulatory compliance and professionalism. Personal loans often result in personal issues which later on becomes the excuse/reason for non-payment between the parties involved.

When you engage a solicitor to recover your debts, unlike debt collectors, they begin legal procedures if the debtor does not pay. They have the capacity to represent you in court if the scenario requires.

The Most Common Private Debts Are:

• Taking out a personal loan from a family member or a friend.
• Rent that a tenant owes you after they’ve moved out.
• If your employer has failed to pay your wages.
• Amount of money loaned for a business.
• Payment for a deposit that has not been refunded yet.

It is critical to safeguard yourself from the start if you decide to provide a loan to someone. The person who is borrowing the money can be someone you may have known for a long time therefore documenting your loan is an effective measure to prevent a fallout and unrecovered money. Hence, when lending someone money, it is imperative to consider how they are going to afford to pay you back.

 Measures to Protect Yourself From Future Disputes Are:

• Keep a copy of each communication, text, or email that mentions the debt.
• Have a contract in place that quotes when the money will be repaid and the terms of the loan verbatim.
• Think about what kind of security you might be able to get if the loan isn’t repaid.

Process of Debt Recovery

Once the debt has been assigned to a collection agency, the creditor will submit the claim information and the accompanying evidence to the debt collector, indicating the failure to pay according to the agreement.

After the collection has been evaluated and the claim acknowledged, the recovery procedure begins with a demand letter sent to the debtor and an acknowledgment letter sent to the customer.

Given debt recovery has a direct impact on your credit score. It is not that easy in Australia to impact a creditor score but a judgment will go on a debtor’s record for 12 to 15 years.

The Account Is Now Active and the Debt Recovery Efforts Involve the Following:

• Contact is made over the phone in an attempt to negotiate payment for the outstanding balance to ensure that the payments are made.
• If the debtor refuses to cooperate in the debt resolution process, the debt collection service informs the customer that the claim will be forwarded to the concerned attorneys.
• The client signs the claim and sends it to the linked attorneys, who then provide suit requirements if the attorneys urge legal action.
• The lawsuit is prepared and filed if the client allows legal action and agrees to the suit conditions. If the customer does not wish to take legal action, the debt collection company will continue with the claim for another 60 days before closing it.
• The complaint has been received. The discovery process commences and a trial date is established if the debtor submits a response. The attorneys will file a default judgment if the debtor does not react.
• If the client receives a favourable judgment, the attorneys will file a writ of attachment, seek to discover the debtor’s assets, and begin the process of satisfying the judgment (liens, bank levies etc.).

In such cases, having a contract in place will be beneficial.

The team at eCollect recognises that these sorts of agreements between friends and family are based on trust. They consider the courts as a last resort; since it may end up costing you more than an amicable resolution with another party. They would be delighted to meet with you to discuss your situation and further provide you with an effective path towards resolution. To schedule an appointment, you can contact them here.