DEBT RECOVERY OVERVIEW
Here is a broad overview on how the debt recovery process works.
The parties involved in a recovery action are:
-the creditor the person who is owed the money i.e. the eCollect client.
the debtor the individual or company who owes the money.
eCollect has identified three general stages in the debt recovery process.
Legal Practitioner Action
Demand Stage
This stage involves:
- read and acknowledge the eCollect engagement authority;
- Our client sending an invoice and chasing the debtor by telephone and in writing for the payment of the debt;
- With no payment being made, eCollect is engaged.
eCollect needs the debtors name, address and contact details along with the amount owed. The data regarding the debts to be collected is entered directly into the eCollect system by our clients or we will create debtor files from electronic data provided to us by email in a format. Entering data from paper records can be organised but is not preferred.
Our client needs to have access available to the following information which will only be needed if requested by your eCollect Account Manager:
- A copy of the invoice or invoices for each debtor;
- If there is more than one invoice for each debtor, a payment transaction history showing the invoices and payments received (if any) with a final balance owing;
- Any documentation showing the nature of the business arrangement e.g. contracts, letters of engagement; etc;
- copies of any correspondence or file notes in relation to the collection of the debt;
- anything else that may assist.
The action taken by eCollect is essentially an extension of the action taken by our clients i.e.
Telephone Calls
Where an account or payment is overdue the most effective means for chasing it is often by making a call to the debtor and reminding the debtor that payment is overdue. It is important to couch demands in the correct fashion and to carefully record the debtor's response. Statements made by the debtor over the telephone may later be used as evidence of an admission of the debt should the debtor subsequently deny owing the monies claimed. Quite often, the debtor will complain about the quality of goods or services provided claiming that they were not right. This is less likely to happen immediately after the goods or services have been delivered and so eCollect recommends a call to the Debtor at the earliest possible opportunity to make sure that the debtor is happy with what has been done by our client.
Letters of Demand
A letter of demand is a useful tool which is used in conjunction with telephone calls. The letter of demand is a formal means of putting the debtor on notice of our client's position in respect of the debt. The debtor is then prevented from denying knowledge of the debt or its amount. A letter of demand should be sent as a matter of course prior to issuing legal proceedings.
The nature of the wording in the letters of demand will depend on the current relationship between our client and debtor. More than one letter may be sent where appropriate. eCollect provides suggested text for these letters.
If no satisfactory response is received from the eCollect letter, then a solicitor's letter of demand is usually sent. This carries more weight and indicates to the debtor that our client is serious about continuing toward legal action. A solicitor's letter of demand will claim an amount for costs. The debtor is under no obligation to pay these costs unless there is an agreement to do so. See the eCollect Info Sheet "Prevention is better than Cure".
SMS
eCollect uses SMS extensively to contact debtors. This has been found to be a particularly useful tool.
Once the eCollect debtor file is created, action is automatically prompted by the eCollect software. eCollect can create a pattern of letters and actions to suit your collection requirements.
All debtor files and action on each file is able to be viewed on the internet. eCollect clients are able to login at www.ecollect.com.au and view the work done by eCollect on their behalf.
As a part of the demand stage, eCollect has several techniques for obtaining payment from the debtor. They are not listed here but as debt collection experts who are paid only on success, eCollect will work hard to collect your money.
Hopefully, the demand stage ends by the debtor paying the amount due or entering into a payment or settlement arrangement. See the eCollect Info Sheet "Payment and Settlement Arrangements".
Court Stage
Where the debtor is unwilling or unable to pay, our clients will consider starting legal proceedings against the debtor.
See the eCollect Info Sheet "Litigation Considerations" and the eCollect Info Sheet "Commencing Litigation".
The court stage involves preparing and issuing the documents which start the court process and bring the matter within its jurisdiction. This must be done by a solicitor. eCollect has a close relationship with E C Legal and will instruct that legal firm to represent you. The documents are then served on the debtor who has the option of disputing our clients claim. If the debtor does dispute the claim, then the legal process becomes more complicated and a decision will need to be taken with the solicitor's advice as to the best course of action.
Enforcement Stage
If the debtor fails to dispute the claim within the allowed time, the solicitor will apply for and receive judgment.
f the debtor still does not pay the claim, there are a number of enforcement options available through the courts.
See the eCollect Info Sheet "Enforcement Options".
Ref: CLIENT INFO SHEET - Debt Recovery Overview
Authorised by: James Woods
eCollect.com.au Pty. Ltd. Not to be reproduced without permission
Last Update: Thursday, 13 November 2008
