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Debt Collecting  

Debt Collecting

A debt collecting agency is a business that pursues payments on debts owed by individuals or businesses. Most debt collecting agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed. Some debt collecting agencies are sometimes referred to as "debt buyers", purchase debts from creditors for a fraction of the value of the debt and pursue the debtor for the full balance. Creditors typically send debts to a collection agency in order to remove them from their accounts receivable records; the difference between the amount collected and the full value of the debt is then written off as a loss.

In many countries, collection agencies are governed by laws that prohibit certain abusive practices. Failure to adhere to such laws may result in lawsuits or government regulatory actions.

Debt meaning

Debt is that which is owed; usually referencing assets owed, but the term can cover other obligations. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.

A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in many cases, plus interest. Historically, debt was responsible for the creation of indentured servants.


Before a debt can be made, both the debtor and the creditor must agree on the manner in which the debt will be repaid, known as the standard of deferred payment. This payment is usually denominated as a sum of money in units of currency, but can sometimes be denominated in terms of goods. Payment can be made in increments over a period of time, or all at once at the end of the loan agreement.

Contacting your debtor

When trying to recover a debt, you should first write to the debtor, setting out the facts of the situation. It's important to include information such as:

* Who’s involved - the name and address of both you and your debtor
* dated copies of all paperwork relating to the debt
* A date by which you expect payment
* A request for the debtor to put in writing any issue or dispute they have with your statement
* Details of the steps you'll take if payment isn't received

It's important to:

* be firm, but calm
* stay within the law
* send all correspondence by recorded delivery
* keep copies of all documents relating to the debt; these may be used as evidence if you have to take legal action


* being drawn into heated arguments or lengthy correspondence with your debtor
* threatening legal action that you're not prepared to follow up

Debt recovery agencies

Some companies specialize in debt recovery and will employ a solicitor to take legal action to recover your debt. They may charge a fixed fee or take a percentage of the money they recover on your behalf.

Debt Recovery Benefits from an Agency

* Fast payment: Customers normally pay faster once a Debt Recovery Agency is involved;
* Increased cash flow: Debt Recovery Agencies can help increase your cash flow by reducing the amount of debts you have;
* Cost-effective: Operate a no collection, no commission policy;
* Low commission charges: Commission charges can be low and only charged on successful collection;
* Nationwide services: No matter where your debt is Debt Recovery Agencies can recovery nationwide;
* More time for you: By letting Debt Recovery Agency collect your debts you have more time to spend running your business.

In the UK, debt collection agencies are licensed and regulated by the Office of Fair Trading. The OFT sets guidelines on how debt collection agencies can operate and lists examples of unfair practices. These guidelines are not law, but do represent a summary and interpretation of various legal areas. Compliance with these guidelines is also used as a test of whether the agency is considered fit to hold a credit license.

Examples of unfair practices include misrepresenting enforcement powers (e.g. claiming that property may be seized), falsely claiming to be acting in an official capacity, harassment, claiming unenforceable or excessive charges, misrepresenting the legal position to a debtor), and falsely claiming that a court judgment has been obtained when it has not.

Collection agencies in the UK should not be confused with court-appointed bailiffs.

Debt Recovery Collecting with an Agency

The use of a Debt Recovery Agency is an excellent way of collecting a bad debt and can help improve your cash flow quickly. specializes in providing a debt recovery service throughout the UK.

Many consumers and companies experiencing financial difficulties will prioritize their creditors for payment. This suggests those creditors who demonstrate the seriousness of continued non-payment are most likely to be paid first.

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