If you have not paid back your loans, credit card loans, personal loans, or even utility bills, you probably get a letter from a debt recovery agency. These agencies collect all your unpaid debts, including your medical loans, personal loans, utility or phone bills, car loan, education loan, or even your credit card. However, there are two types of these agencies; one who is hired to gather these debts, and others are those who buy old debts for some time on dollars. Nevertheless, you should first know about what the debt recovery is and how does it work.
Debt recovery is also known as debt collection; however, it differs from a slight but distinctive feature; the person who collects the debt from the borrower, wither it the creditor himself or he involves the third party in it. When any kind of load remains unpaid, then the creditor hires an agent to gather all your debt and specifically focuses on collecting cash from the debtor; this whole process is called as debt recovery.
It is important because it is straight associated with your credit balance. Nevertheless, when the debt recovery agency sends you the letter of debt recovery, it men have all your records about your cash balance and pending loans, and these records are informed to the credit agencies. After that, these credit agencies have all the authority to damage all your credit score. If they do this, it can possibly impact your chances of taking further loons in the future.
The process of debt recovery comprises some steps, and you must have recognized these steps so that you should know about the expected steps when a debt recovery agent would contact you. since the financial loans are a challenging condition, so it is crucial to know about the process. I will guide you about the process of debt recovery; however, make sure that you keep protected from being harassed by this process.
Steps Involved in Debt Recovery
Before initiating the debt recovery process, there is a settlement being done in which the debt recovery agency gives you an opportunity to meet the creditor and pay back all the loans without attempting the court trials and avoid wasting money. However, if there is still no response, then the procedure takes off.
1. Hire Debt Recovery Agent
The debt recovery is made by the third party other than the creditor and the debtor who is known as the debt recovery agent. Nonetheless, when you don’t return the loan to the creditor, he starts this process by sending you a letter in order to inform you about the process. Yet, before sending you the letter, he also sends the debt agreement in which all the rules and regulations were written, and your signatures were done, to the agent, so that he could start the process according to that agreement. Once this agreement letter is studied and agreed by the agent, he would start the debt recovery process by sending the acknowledgment letter to the debtor. After a few days, the debt recovery process begins.
2. Appoint Associated Attorneys
The process begins with the phone contact of the agent with the borrower to simply ask for the payment or to ensure that the debtor has released the payments. However, if he does not cooperate in resolving this matter, the debt recovery agents update the creditor with the information and hire some associated lawyers to look after the case. Once this information letter is reviewed and accepted by the creditor, it is further sent to those advocates. On the other hand, if the creditor does not sign the statement, and acclaim some alternative actions yet legal, then some other appropriate actions are needed.
3. Legal Actions Take Place
If the creditor agrees on these legal actions and appropriate requirements, then the case starts preparing and filing. However, if the creditor agrees on all the requirements without recommending alternative actions, then the debt recovery agency works on the agreement for 60 more days, and the case is closed.
4. Final Judgment is Done
Once the complaint is filed and the borrower has responded towards this case, then the process would be going on a trial basis. In oppose, if the debtor still does not respond, then the case goes towards further inquiry. In this case, the ultimate decision would go in favor of the creditor, and the judgment would file a Writ to Attachment letter and tries to locate the borrower’s assets and fulfill the creditor’s loan by taking all these assets.
What happens if the debtor does not respond?
As I discussed above, if the debtor does not attend the court trials or respond to any of the letters, then the court makes a decision against the debtor. Nevertheless, when the creditor gets the judgment against the debtor, then he has all the authority to adopt an alternative technique to get all of his cashback. He has the power to seize his borrower’s property, freeze his bank account, or possess his house. Once he has gone these approaches, he has all the right to do anything about this stuff; wither he can sell the house out by conducting an auction, use his bank balance, or sell out his property to achieve his money.
Process Period of Debt Recovery
Well, the time period of the completion of the debt recovery process depends upon the situation of the type of debt. However, the earlier you recognize the debt, the quicker the debt recovery agent would initiate the process, and the more promptly it would be resolved since the older debts may work more precisely and help to locate the debtor more speedily. On the other hand, the completion period also depends upon the response of the borrower; if he contacted you at first, after receiving the letter, the case would be resolved with the blink of an eye. Yet, if he does not pay any attention, the case would go in further proceedings.