Personal Debt Collection Process – Expert Advice
Personal Debt Collection Process – Expert Advice
Being owed money is one of life’s most frustrating experiences. If there is someone that fails to pay what they owe, it is often challenging to know what to do.
Many people that are owed a personal debt are acting independently. They might be a private individual or self-employed person.
Each may have the perception that there are few options open to recover a private debt. They might also think that it is too expensive to recover the debt. Understandably, this makes a lot of people choose to write off their debt.
Despite this perception, there are always options available to recover a personal debt. There are also steps that you can take in order to begin the personal debt collection process.
We asked our debt recovery experts what the best options for a personal debt collection process were.
Recovering a Personal Debt
There are many reasons why a private individual might be owed money. A self-employed person may have a debt owed from a client that has not paid them. Another example might be that of a private individual that has loaned money to a friend or family member. Later, this personal loan has not been repaid and the individual is placed into a difficult situation.
For a business, this can be a serious situation. For a private individual, it may mean the difference between being able to fulfil your own financial obligations or not.
Regardless of the circumstances, there are steps that you can take to aid in the debt recovery process.
As frustrating and stressful as being owed personal debt is, it is critical to prevent your emotions from taking over. A personal debt collection process must be performed in a professional manner.
If your emotions get the better of you, conversations may turn into arguments. This will only make the situation worse, and may even give your debtor grounds to withhold payment.
Throughout the entire personal debt collection process, you must remain calm, collected and professional in tone. Doing so will ensure that you communicate clearly and prevent you from giving your debtor an excuse not to pay.
This can often be difficult, especially if you feel hurt or have been put into financial distress by the person who has not paid you. However, following this advice is crucial for the eventual recovery of your money.
Contact the Debtor
The first step in a personal debt collection process is to contact the debtor. The best method to reach out to them is by writing a letter and sending it through recorded delivery. Or, if this is not an option, sending an email with a read receipt.
Contacting them this way will ensure that there is a paper trail of messages should you need to refer back to this later.
Your message to the debtor should remind them that they owe a payment that is now overdue. This message should have a professional tone, and clearly state the amount owed.
You should only contact the debtor during reasonable hours such as between 8 am and 6 pm on weekdays. You should also provide them with enough time to respond before sending another message.
Dispute Resolution and Mediation
Before taking further action, it is sometimes worth attempting to settle the matter between you and the debtor. One way to do this is to ask a mediator to help you reach a compromise.
This can be effective, and in some cases can prevent the expense of stronger solutions. However, it may also mean that you are unable to recover the full amount of what you are owed. Despite this, it is always worth considering before committing to another course of action.
Letter Before Action
If your debtor is refusing payment after you have contacted them with a reminder, you will probably want to take stronger measures. Whilst instructing a debt collection agency or taking legal action might be on your mind, sending a final notice to your debtor might be a good way to prompt payment.
This letter is known as a “Letter Before Action”. As with all other communications to the debtor, this should be clear and professional in tone. You should clearly state that unless the full amount owed is paid, you will escalate the matter to a professional.
Seek Professional Assistance
If your debtor is still refusing payment after taking the steps mentioned above, it is time to hire a professional.
Historically, court proceedings have been the preferred method of debt collection. Often, successful outcomes result in county court judgements being issued against the debtor. Whilst this is a positive result, this still needs to be enforced.
Court action is a very expensive course of action, and many private individuals cannot pursue this option. Instead, the use of debt collection agencies has become more common in recent years.
A professional debt collection agency will provide a specialist and cost effective recovery service.
Frontline Collections is one such agency. Since 2005 we have recovered thousands of personal debts, helping both private individuals and small businesses alike.
Speak to one of our debt collection agencies now for more information on our award-winning service.