Presuming that the creditor organization is no longer interested in pursuing the collection of the debt through any in-house debt collection unit (if they have one at all), it may exercise the option of outsourcing the task to an external debt-collecting agency. A Debt Collection Service should not be confused with a Factoring Service that undertakes the collection of only live debts on which they pay you an advance too amounting to as much as 90% of the total debt. Conversely, debt collection agencies undertake the collection of bad debts generally on a “no collection, no fee” basis. A creditor organization has nothing to lose by outsourcing the bad debt collection to a third party. In the majority of cases, the debt is already removed from the books of the creditor organization by the time it is outsourced.
Debtors have been given much protection through the Fair Debt Collection Protection Act (FDCPA) of 1977 against forcible and unfair extractions by the creditors or their agents. Debt collection agencies are professionals learned in the relevant laws, procedures and the art of debt collection. They can come up with multiple strategies for effective collection depending on the nature of the dept and the debtor. Bad debt collection is highly time consuming with planned follow up action to be pursued at required time intervals with many records too to be kept accurately in case the debtor has to go to litigation one day to obtain settlement. Hiring a debt collection service is the only wise move to make in the said circumstances.
With a professional firm handling your irrecoverable debt collection on your behalf, you can stay focused on the more important aspects of your business without having to worry about past-due debt collections too. These debt collectors who are well trained for their job will know how to do a far better job of recovering as much debt as possible while being courteous and respectful and maintaining good relationships with the debtors concerned. They will keep you out of possible prosecution for breaching FDCPA regulations through your professional ignorance. You are also freed from the additional responsibilities, expense and risks involved in the alternative option of employing an in-house debt collector. They have all the incentive to try to recover the best they could as they work on a commission basis.
Here are some points to ponder before hiring a good debt collector.