Debt recovery explained

The business of debt recovery is very simple; it is the process if collecting an outstanding debt from either a company or individual by using a third part debt recovery specialist http://www.debt-claim-services.co.uk/. Companies such as this will effectively take over the debt and contact the debtor directly, and try to make a financial arrangement acceptable for both parties so the debt is cleared without it having to go to court.

First of all let’s clear up a general misconception regarding debt recovery and debt collectors, companies do not want to hire a debt recovery company to recoup what they are owed as they have to pay them for this service and companies will do whatever they can to prevent having to take this step. They are willing to set up payment plans to help the person with the debt, but if they then default and stop paying it is often the only way that firms can recoup at least some of the debt owed, after they have paid the debt collectors their commission.

What anyone has to be careful of when they are considering hiring a debt recovery service is to shop around as there are more way of recovering a debt than many people realise, and the service you choose can make a big difference as to how much, or little, of what is owed can be recovered. A company trying to collect a debt from a company will get the best return if they are a large corporation and have a debt recovery agency as a subsidiary.

This is effectively keeping the collection in house so the largest amount is recovered through a mutual solution being found and it can also mean that they retain the debtor as a client as lets face it everyone can go through a tough time, especially in the current economic clime. By giving them a structured payment plan the debtor can clear what they owe without any penalty and still stand in reasonably good stead with the business they owe the money too, a win win situation for all.

A third party recovery agency has no ties at all with the company who have hired them, thus more commission is paid so less of the original debt is recovered .The percentage paid on the debt once it has been collected is around 10-50%, and it very much depends if one letter to the debtor has done the trick or if several have been needed, backed up with emails, phone calls and even home visits.

A third, and increasingly popular option, is when the company sell off a debt to recovery agency for a percentage of the outstanding debt, and it is then the agency’s responsibility to collect the debt otherwise they are out of pocket. This method is unpopular amongst debtors as sometimes heavy handed tactics are used to recover the debt, and this has caused laws to be written regarding the collection of debt in the UK to make sure no bullying or threatening tactics are used outside of the usual methods.