As a creditor, it can be very frustrating to experience missed payments from a customer. It can take a significant amount of time to chase debtors for the money owed, and this can create additional costs for your business.
How you can move forward to collect the debts will depend to some extent on the debtor’s situation. By having a procedure in place as a business, you will be better equipped to deal with collection attempts when they are necessary. The following are the most common collection options that creditors have when a debt is unpaid.
Contact the debtor
You have the right to contact the creditor directly in the form of a phone call, email or letter in the mail. It is important that you act calmly and professionally when dealing with the debtor, as this will give you the best chance of retaining the debt with minimal complications.
Transfer the debt to an agency
Many creditors, on failing to gain payment by contacting the debtor, transfer the account to a debt collection agency. Debt collection agencies must abide by the Fair Debt Collection Practices Act (FDCPA). If they do not, the debtor may be able to claim for damages.
Taking legal action
If the creditor is still unsuccessful in securing the debt owed, they can look into taking legal action to collect the debt. In doing so, it may be possible to claim the debtor’s property to cover the debt.
As a creditor, it is important that you do not delay action on any unpaid debts and that you hold the debtor liable for their actions.