Debt recovery and debt collection are pretty similar phrases with one little but critical difference. The main point of difference is in the one attempting to collect the debt.
A creditor’s attempt to recover consumer credit and loans that have not been paid back is known as debt collection.
When a loan, such as a credit card balance is not paid for, a creditor hires a collection service, to work on collecting the money.
Debt recovery is crucial because it has a direct impact on your credit score.
For following a sequential debt collection process in Sydney, you can click here. In order to know more about it, keep reading further:
1. Debt Recovery Process:
Once the debt has been committed to a collection agency, the creditor will send the claim information and accompanying evidence to the debt collector, indicating your failure to pay according to the agreement’s conditions. After the debt collection service has evaluated and acknowledged the claim, the recovery procedure begins with a demand letter to the debtor and an acknowledgment letter to the customer.
2. Your rights:
Debt collection harassment is not permitted. If you’re being called by a debt collection agency and want them to stop calling, it’s best to speak exclusively in writing, as this keeps track of every conversation about the purported debt. A cease and desist letter is what it’s called.
A cease and desist letter should be a straightforward statement that you do not want to be contacted by the debt collection agency again. Send the letter via certified mail with a request for a return receipt.
3. Initiation of efforts:
The first phone call is made in an attempt to negotiate payment for the outstanding balance and ensure that the payments are made.
4. What if the debtor refuses:
If the debtor refuses to cooperate in the debt resolution process, the debt collection service informs the customer that the claim will be forwarded to the affiliated attorneys.
5. Customer’s duty:
The customer signs the forwarded claim and sends it to the linked attorneys, who, if they urge legal action, give suit prerequisites.
5. Lawsuit:
The lawsuit is prepared and filed after the client permits legal action and agrees on suit conditions. If the client does not want to take legal action, the debt collection organization will work on the claim for another 60 days before closing it.
6. What about the complaint:
The complaint has been delivered. The discovery process begins and a trial date is set if the debtor files a response. The lawyers will file a court judgment if the debtor does not react.
7. Judgment:
If the client receives a favorable judgment, the attorneys will file a Writ of Attachment, attempt to discover the debtor’s assets, and begin the process of satisfying the judgment (bank levies, garnishments, liens, etc.).
The process of debt recovery has multiple parts, and it’s crucial to know what to expect when you’re approached by a debt collector. Indeed, because financial debt is such a difficult condition, legislation has been enacted to oversee the debt collection process and protect consumers from harassing debt collection techniques.
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