Why is debt recovery through a debt collection agency not the best option?
Most people seek to recover overdue payments by entrusting this task to a debt collection agency. On behalf of their clients as creditors, these agencies administer the claim. But does this method really pay off? If the amount owed to you is substantial, then the answer to this question is NO!
- Firstly, this debt collection process produces no legal implications for the debtor. This means that the debtor’s finances will not be subjected to any restrictions and, as a result, the debtor will be in no rush to pay you.
- Secondly, this collection process delays the resolution of the claim. What matters to you most is being able to collect the money that is owed to you. But while this process is unfolding, you will not have access to this money or any claim security.
- More time has passed, and you still have not received your payment. All this waiting may cost you a lot of money. If the debtor’s assets are not seized, you might end up (e. g. if the debtor goes bankrupt) at the bottom of a list of creditors trying to recover their debts. After a period of 3 years, simple court claims that have not led to a court judgement or the seizure of the debtor’s assets are statute-barred, and you are no longer allowed to collect this debt.
- Aside from the above, many people believe that debt collection agencies have the right, e. g., to seize debtors’ vehicles or other property. Unfortunately, this is not the case. Debt recovery does not entitle debt collection agencies to seize any property or enforce your rights to receive payment.
