Lenders and creditors use a debt collection agency to collect past due funds or accounts in default. After numerous failed attempts at collecting its receivables, creditors will often hire a debt collection agency. A lender may outsource the collection agency, or an internal department or subsidiary may handle the task.
Key Takeaways on Debt Collection Agency in Chennai India
Lenders use a debt collection agency to collect past due accounts or those in default.
To retrieve delinquent funds, debt collection agencies work closely alongside lenders and credit bureaus.
Fair Debt Collection Practices Act (FDCPA), regulates collection agencies and sets out rules for what they can and cannot collect funds.
How a Debt Collection Agency works
Creditors will report borrowers who default on their loans or fail to pay their loan payments to a credit bureau. This will not only affect the credit score of the borrower, but it will also result in their debt being turned over to a debt collection agency within three to six months.
When a Borrower Pays
Let’s say the borrower can pay their debt due to the efforts of the collection agency. In this case, the creditor will pay a portion of the assets or funds it recovers to the collection agency. The debtor will have to pay all of the debt at once, or just a portion depending on the agreement with the creditor.
If a Borrower Doesn’t Pay
Let’s say the borrower is still unable or unwilling to cover the arrearage. The collection agency will update the borrower‘s credit report by putting it in “collection” status. This can lead to a decrease in credit scores. Low credit scores can impact a person’s ability to obtain a loan over the long term. An account that is under debt collection can stay on their credit report for seven-year.
To recover funds, collection agencies employ multiple strategies such as these:
- Calling the debtor’s office and personal telephone numbers
- Sending several late-payment notices to the debtor
- To confirm contact information, they contact the family, friends, or neighbours of a debtor.
- At the front door of an individual
Regulations for Debt Collection Agency
The Fair Debt Collection Practices Act (FDCPA) is binding on third-party collection agencies but not creditors’ in-house collections departments. Some rules are cited below.
The following are things that a debt collection agency might not do:
- Proceed to collect an uncollectible debt that has been charged as “Uncollectible”- The debtor has filed for bankruptcy or is unable to be located.
- For a borrower’s debt, physically harm or threaten to sue the borrower.
- Legally seize assets of a debtor – unless the collection agency has won an action against a debtor.
- To get a payment, physically or verbally harm or threaten to harm a debtor.
- Contact an employee at work even after they have explicitly stated that their employer disapproves of such calls.
However, a debt collector might do the following:
- Debt Collection Agency can attempt to collect a debt that the statute of limitations has expired. This is usually between four and six years from the date of default.
- Call between 8 a.m. – 9 p.m.
- Debt Collection Agency can contact the employer about child support dues, alimony dues, student loan debts, taxes, and other personal debt outstanding.
Our debt management program on Commercial and Personal Debt recovery services takes into consideration
- Case assessment
- Pre-litigation advice
- Friendly discussions
- Forthright analysis
Debt advice provided by us to debtors is firm but friendly. Upon receipt of a claim, our debt collection agency will assign immediately to the dedicated team of Recovery Attorneys & other Professionalsdepending on a case to case basis.
As debt advisors and commercial debt recovery agencies. We comprehend that the debtors could be your clients and therefore we tread softly resolving the bad debts collection matters through diplomatic negotiations, first, by using proven strategies. In the event that litigation becomes necessary, we delegate the responsibility to our skilled collection agency attorneys.
Our expert recovery agents designated to the client will be responsible to monitor bad debt collections and systematically measure the strategies and liaise with the clients on an ongoing basis thereby ensuring that client expectations with regards to their bad debt recovery are met.