Commercial Debt Collection

There are companies that specialize in commercial debt recovery, whether for large organizations or small businesses.

Commercial debt collection is the process of accumulating the entire amount owed by an individual or a business entity from a company. More often than not, debt collection is tedious. It is usually difficult to deal with the debtor in settling his debt with the company. Debt occurs when an individual or business entity that is subscribed to a particular service is not able to pay the amount due or has outstanding overdue balance. The process of debt collection involves both business and legal transactions.

How Debt Collection Works

When a subscriber of a service, whether an individual or a business entity, has any outstanding balance to a company, the company pursues the collection of the amount due. Large-scale companies normally have an in-house debt collection department while others who cannot afford to hire their own people normally contract debt collection agencies. The process of collecting debt starts with the coordination of the debt collection agency or department to the debtor through phone calls. The goal is to push the debtor to settle the amount either in full or in an installment basis.

The debt collection agent must be patient, determined, and skillful in making negotiations with the debtor. Debt collection for individual debtors is more aggressive and if phone calls do not work out, the company will start addressing the issue through a collection agency led by a debt attorney. The agency or department sends notices in forms of letters stating the last adjusted date for payment. The collection agency is aggressive in pushing the debtor to settle the overdue amount and sometimes, the aggression leads to harassment.

When Debt Collection Doesn’t Work

If the third-party agency is not able to settle the collection through legal notices and phone calls, it has the authority to file a lawsuit. However, this is dependent on the governing laws for consumers and trade on the country concerned. In the United States, debtors are protected by the Fair Debt Collection Practices Act wherein it limits the harassment and abusive methods of collecting debts. Depending on the capabilities of the debtor, it is the responsibility of the collection agency to devise methods in accumulating the debts. This is a part of the pre-litigation process, but if no participation is solicited from the debtor, it is the choice of the debt collector lawyer to pursue a legal complaint against the other party.

Debtor’s Rights and Responsibilities

In settling debts, the debtor always has the option on ways to pay his debt. This is part of the Fair Debt Collection Practices Act which states that the collector must always devise ways in dealing with the debtor in order to collect the amount due. Thus, the collector can specify if he wants it to be paid on an installment basis or not. He also determines the date as to when the payment shall be made. However, it is the responsibility of the debtor to abide by his terms including the schedule of the payments; otherwise, it will be regarded as a declination to the will to settle debts. Debt collection is oftentimes painful for both the collector and the debtor.