By John Schofield

Recent reports reveal that consumers in the United Kingdom, now owe more than 1 trillion pounds. As consumers’ debts goes more and more out of control, credit cards and banks have no choice but to pass the job of collecting debt to various debt collection agencies. The bulk of consumers’ debts are from loans made out to pay for mortgages and uncontrollable credit card purchases. The number of borrowing increases everyday and because of this, more and more people are dealing with financial difficulty. More and more people are not able to pay their debt but their borrowing has not really stopped. Financial agreements are no longer reliable. Consumers merely pass delinquent agreements from the original lender then to the debt collection agency.

Collection agencies are companies that exist to collect bills that have gone over due dates and are still left unpaid. They are hired by other people, businesses or companies to do the job that they can no longer do by themselves. In return, these agencies charge a fee, which is deducted from the actual cost that is to be collected from borrower. A small percentage of the amount is recalled or sometimes, the debt collection agency will purchase the delinquent account from the original lender and earn full control of the debt. Also, collection agencies are great when you are dealing with small or medium sized debts because they will most likely extend more effort to collect this kind of size rather than large ones.

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Chasing delinquent debt is not exactly inexpensive. In fact, the process is costly if not excruciating, so another reason why collection agencies are becoming more and more popular nowadays is due to the fact that financial institutions with large database of debts are able to unload some of their burden to these agencies by selling them. Financial institutions deal with large portfolios of outstanding debt and by selling some of these delinquent debt to the collection agencies they are able to recoup some money and free up on costly expenses.

Tactics for collection of debts

Collection agencies employ various methods to be able to collect debt from different people. They use letters, litigations and telephone calls. Letters are always the initial action that they take. They send notifications to the debtor, to allow them to enter into a negotiation to settle the existing debt they have. The letters are called demand letters and they serve as warnings to delinquents; and until the debt is not settled after given time, they will be sent a final notification letter. When the date specified has passed and no action or response has been received from the debtor, the collection agency will have no choice but to use more extreme methods.

Apart from letters, the collection agencies can also make personal calls to the debtor to demand that they pay. Debtors may receive calls from the collection agencies at their home to be able to design a more bearable method of settling their debt with the agency. The last resort to collecting debt is litigation, this is used only when telephoning, and letters produced no result. This method will involve taking the debtor to a small claims court where he could declare bankruptcy. It is in such situations wherein a debt collection solicitor can be of great service.

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