Legal 

Debt Collection in Sydney and How Debt Collection Expert Recover it?

Research Scholar and Teaching Assistant National Law University, Jodhpur

Debt is any sum of money that’s owed from one party that is the debtor or the borrower to the creditor or the lender. Usually, a ‘debt’ and a ‘claim’ are co-extensive because while debt is debtor’s obligation, a claim is the creditor’s right. A debt may turn out to be a bad one if the debtor doesn’t pay the creditor back in time as a result of which it has to be written off. This is a loss transaction for the creditor and only the debt recovery may generate income.

i.    Debt recovery and Debt Collection – the difference

While the debt recovery may involve more technical and statute based approach, debt collection is a simpler way of recovering money like sending letters requesting payment, making phone calls and other ways to remind about the payment. A sound management policy to collect debt ensures that gradually the calls for the payments would become assertive and formal with the reluctance of the debtor to pay with time which may be due to inability or deliberate. Sometimes Letter of Action may serve as a warning before proceeding to the Courts for relief. Recovery through the Court may be expensive with no guarantee or minimal guarantee of payment even after judgement in favour of the creditor.

ii.   Debt collection – Sydney

A debt collection service ensures service of recovering your money if the simpler mechanism of reminders hasn’t worked for you, for monetary consideration in the form of fees or commission which may be a percentage of the value of the debt. This may range from 5 to 30 percentage or may depend upon agreement between the hirer and the collection service agency. It is often a two-stage process, first a prefatory ‘letter of demand’ as a forewarning to pay to fail which a ‘final letter of demand’ shall be issued. In the event of non-compliance of which shall give rise to legal action. Sometimes the creditor may even adhere to the debt purchasing in which he has the option to sell the debt to the debt collecting agency for a small value of the debt, in that case, if at all the agency is able to recover the debt there would no legal claim of the creditor on the money. Online services may even be used to hire the collection agency, though the service is more convenient and cheap as in this you need to mention the amount, purpose of the debt and debtor’s details online and make payment of fees through the portal but this gives little option to control the terms and the conditions, often resulting in no advice and danger of internet frauds and pregnable payments. A debt collection service may even be engaged on an annual basis.

iii.   Debt collection agency for small business

In Sydney, small business is quite popular and societal owing to its contribution of more than $25 billion a year which is roughly a quarter of the economic output. A small business which is extant to all priority and economic sectors necessarily involves the engagement of fewer than 20 employees right till its entire period of operation starting from the inception stage itself. There are small business commissioners or ombudsman, who are usually government appointed advocates and may help in cost-effective mediation. They act for the concerns of the small business by investigating unfair market practices adversely affecting the small businesses. Australian Small Business and Family Enterprise Ombudsman work for the interest of small and family businesses by providing them with the needed assistance, advice and information. You may search for debt collection services by using search engines or through your local business directory.

iv.   Debt Collection Expert

Debt collection experts (DCEs) have an expertise and sound professional knowledge related to debt collection mechanisms and is usually persons who are trained and reliable in handling the accounts. They generally derive high rates of pay for collecting bad debts. Firms, agencies and individuals may act as DCEs. Robo-debt, where a computer data matching programme ascertained and verified over-payments without human intervention, was criticised largely for its failure due to immediate and rash issuing of a letter of demands with a notice stating a very less time period for payment.

To ensure a smooth debt collection requires planning and proper strategy in place to address the issue of any sort of failures that might crop up due to the hasty approach. This also requires a good record keeping of the invoices, overdue payments, contracts etc. To fortify more organised approach the debt collection must be in stages having a particular gap of time to serve as notice of repeated reminders and thereafter ‘ a letter of demand’ may be followed by legal action in case of failure to pay after all the pre-procedures have been taken care of. This reflects a good plan of action on the part of the debt collection experts, given the fact that an untimely, fortuitous procedure would land up in a more awkward situation for the debtor as well as the debt collection service agencies.

Debt collecting agencies may help in improving the cash flow of an entity which may be due to a bad credit management policy, bad risk assessment, non-performing assets, lack of efficient record keeping etc. The agencies help in the risks and tracing the accounts and records for overdue and missed payments thus helping in recovering the debt.