Debt Collection

Debt Collection is essential in any business where you do not receive money up front for your product. There are a number of ways that you can go about debt collection and it will generally depend on you situation and circumstances as to which method you choose. Most large businesses hire debt collection agencies who specialize in the investigation, analysis and collection of debts because they don’t have the internal resources to cover their debt collection needs. However, many small businesses also do their own debt collection because sometimes it is only a small problem which can be solved quickly and easily with efficient administration or a quick phone call.

Some of the factors which you can analyse before embarking on a successful debt recovery process is the size of the debt, the location of the debtor, the ability of the debtor to pay, your location, the type of debt and the length of time it has been outstanding. Small debts, which are usually referred to as being under $5,000.00 can usually be collected with simple processes like calling and issuing letters of demand. If this fails, they then go to a small claims tribunal. Medium sized debts, over $5,000.00 but under $50,000.00 are something that you should involve a lawyer with straight away and they will normally need to be heard in a district or regional court depending on your location. Large debts of over $50,000.00 will most likely become quite complex and certainly will be difficult to collect with a very good lawyer assisting you. Debts of this size may involve serious sanctions against the debtor, repossession proceedings and possibly insolvency.

The location of the debtor is important because generally, the further away the debtor, the more difficult it is to recover the debt. As the debtor moves further away, they may move out of immediate legal jurisdictions and will be less willing to negotiate as they are less accountable to you and your peers as they are far from you physically. The length of time that a debt has been outstanding is also an important factor in determining if it is collectible. In many jurisdictions in Australia, if a debt has been outstanding for 6 years, it can no longer be recovered because of general statutes of limitations. Also, as debt go on, if you have provisions operating like contractual interest the debt will get larger but the records that the debtor has will probably get older, more difficult to find and the person at a company that owes you money may turnover and the company will loose its corporate memory as to what is important to chase and follow up, like paying invoices promptly. So it is generally better to pursue a debt as quickly as possible.

A vital consideration is the ability of the debtor to pay. If you know for certain that they cannot pay, there is no point pursuing them. You can collect information about their ability to pay by doing property searches to check what property they own, or by doing company searches to check what companies they are a director of or may have an interest or shareholding in. Identifying these assets will be vital in allowing you to determine if it is possible to recover a debt from them.

Naturally, the first step in almost any debt collection process is to send a letter of demand, such as the one we have available on this site which you can purchase by clicking below. This is a good option because it allows you to do for yourself what most debt collection agencies would charge a fee for. However, if there is no response as a result of you sending a letter of demand, the next stage is legal proceeding which we would always recommend that you seek legal advice for. We also have available on this site live lawyers to answer any legal questions you may have about debt collection.

Debt Collection Letter Resources

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• Debt Collection Services How can a debt collection service help me? What can I expect from a debt collection service?
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• Medical Debt Collection Doctors and Medical Professionals often have serious debt collection problems. We can help you recover debt from patients who refuse to pay for your services.
• Online Debt Collection What are the advantages of online debt collection? What types of online debt collection services are provided?
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