Everyone in this world needs money. The day to day requirements and high rate of inflation together makes people to takes credit cards or loans to fulfil their needs.
People take the loans and later due to their poor financial problems, they aren’t able to repay the money they owe. However, some people are a fraud. They take money from the creditor saying- They will return it in time. Unfortunately, These type of fraud people doesn’t return the money and become vanished in another country of the world.
When the person, company or banks aren’t able to retrieve their money which they lend to others, then the process of Debt Collection and Debt recovery starts. Before we discuss these terms in detail, we should know a few terms such as:-
- Creditor- A creditor is a person, company or banks who lend money to others.
- Debtor- A debtor is someone who takes money from the creditor in order to fulfil their needs. They are given a certain time under which, they should give the money back.
Let’s get started…..
Debt Collection And Debt Recovery
These two terms sound similar. Both of them try to regain their money which they lend to others.
However, there is a small difference that exists in the middle of them. Let’s learn about them:-
Debt Collection is a Process of getting the money back which is lend to others by the lender(Debtor) himself. That means, The person or company who lends money makes attempts to get their money back themselves.
However- Debt Recovery is a process of getting money back which is lend to others by the help of third party in the middle. That means, when the money owner isn’t able to get back money even after several attempts, then they give this to the company. Many Debt recovery companies use different strategies to recover the money easily.
So- This is the small difference between Debt Collection and Debt Recovery.
Process Of Getting The Money Back
While giving money to the debtor, there is an agreement under which the debtor should return the money to the creditor.
But if the debtor doesn’t pay the money back in time and missed the due date, then the process of Debt collection starts. The debt collection period usually runs for 30 days.
During this period of time, Creditor like Banks, Companies Or Individual tries to contact the debtor. They send letters, email and try to connect through the phone calls. If the debtor doesn’t give any response to all of these attempts, then the debt collector hires a third party to retrieve their money.
Anyone who has burrowed money should try to give back the money within these 30 days. This is because, During these 30 days, the matter remains within creditor and debtor. There is no use of legal procedure and it will help to maintain the good image of the debtor and they will have a chance to get a loan again in future.
Now-Even after several attempts within 30 days, If the debtor doesn’t show any response then the third party comes in action. They are debt recoverer.
The debt recovery companies first to try to contact the person with phones and emails. If the person doesn’t reply this, then they start a legal procedure. All the actions of debt recovery are recorded. This can affect the debtor credit card score. Sometimes, Debt Recovery companies block the credit card of the debtor. Even after all these actions, if the debtor doesn’t pay the money back. Then, Debt Recovery companies file the case in court against the debtor. The court fixes the date of announcement and on that date, debtor has to present in court and try to convince them with proper legitimate reasons. If he is not able to convince them, then he has to pay the loan back within the date issued by a court.
Now- Even after courts judgement, if the debtor doesn’t pay the money back. Then, Creditor has right to take any cash that debtor has and even the assets of debtor will be taken to compensate the money.
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This is the total process of Debt Collection and Debt Recovery. Now, Let’s learn, how a creditor can get money back in time without going to court by using the best strategies.
Strategies Of Creditor To Get Money Back
Here we have listed some points which can be followed by the creditor in order to retake money from the debtor. However, During all these strategies, Creditor can’t follow the illegal paths like Blackmailing, Threatening and Revealing Debtor Privacy.
Here are some points to follow which can help to get money back:-
- Creditor can send an automated message on regular interval to debtor mobile reminding them of the money they have to pay back.
- Creditors can track the debtor account. This helps creditor to know when does the debtor have money. When they see money in the debtor account, they can call him and ask to pay the money back.
- Creditor and Debtor should make paper agreement while giving loans. This agreement paper can help to win the case in court.
- Creditor should try to gather information about the debtor before giving them loans.
- Creditor can remind the debtor about the legal laws and punishment which are given by court if he/she doesn’t pay the money.
- Creditor should record the location of the debtor and visit their home on a regular interval. This helps to prevent the danger of leaving the country by debtor.
- Creditor should hire a debt recovery agency and tell them to regain money back remaining under legal process.
So- These are some strategies that creditor can follow to get their money back from the debtor.
However- All these techniques should be done under legal ways. The Australian government has made some regulations that both creditor and debtors should follow while giving and taking loans. These guidelines were first made in 2005 under the supervision of Australian Competition and Consumer Commission (ACCC) and Australian Security and Investments Commission (ASIC). These regulations were later revised in 2017.
Creditor and debtors should read all these regulations before doing any agreement. These laws explain the things like Creditor shouldn’t threaten the debitor and Debtor should be honest with the creditor.
Loans are something that is needed for many people around the world. But- We should try to make a very good agreement between creditor and debtors remaining under the laws made by the government so that there will not be any problem in future.
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