What is the difference between a credit recovery service and a debt collection company?
It is generally believed that debt recovery and collection are two different things. They seem similar, don’t you think? It is the English Oxford Dictionary defines ‘recovery’ and ‘collection’ as:
Recovery = Retrieval Returning and Redemption.
Collection/Collect = Group for Assemblement, to Fetch and to build up.
Alike, but not quite the exact.
A large portion of debt recovery cases are handled by solicitors following attempts to collect debt have been made unsuccessfully , but the debt remains due.
Debt collection companies offer a low-cost and speedy online service available online.
In our experience, the debt collection agencies typically issue regular 7-day payment demand letters that give basic information about the debt. But, as the old saying states, “you get what you pay for”. If there is no response or no payment be received to an order for payment, this letter would not be sufficient if you needed to progress the matter toward court proceedings because it would not comply with the Court’s pre-action obligations.
Debt collectors in Manchester may be able to make your claim, or even serve a Statutory Demand that is the back of this 7 day demand? Perhaps but there are grave consequences if you do this. In the first place, a reasonable amount of time (in the mind of the Court) for a debtor’s response of 14 days (longer for more complex instances). There is also certain information that should be included in the letter before Action or a Letter of Claim, which these 7 days demand letters for payment often fail to include. The result could be outcomes such as the Court inflicting costs sanctions or the case could be suspended at the request of the Court (halted for a specified period) and the reasons behind failing to adhere to the correct guidelines are examined.
An important factor to consider is whether the debt collection agency will engage in negotiations and correspond with the debtor in case the debt is contested and assist with moving your matter towards a satisfactory conclusion. According to my experience, the debt collection companies do not typically handle disputes.
It’s not to say that a letter of collection could not be effective, but it might be able to help for a simple matter and the payment is made by return and the case is closed. In the event of no response , or payment or if the debt is disputed, the debt collection process has run its course and could result in an additional cost being incurred prior to the instruction of Solicitors as well as the formal debt recovery process.
Debt Recovery
If a debt is due either during the course of business or between individuals the process of recovering debt is initiated according to goals set out in the Pre-Action Practice Direction Ethics and Procedures. If a debt is owed to a business from an sole trader or an individual, the recovery process also must comply with the 2017 Pre-Action Procedure to resolve debt claims, which was recently put into place by the Ministry of Justice. Should a matter need to go to court it is crucial that the compliance with these guidelines can be fully demonstrated. If not, sanctions may be imposed, particularly as cost-related. These protocols ensure that parties exchange enough of information prior to the beginning and demonstrate a willingness to resolve any disputes without the need for Court hearings.
We understand that every case is unique – it is extremely rare that the circumstances that lead to the non-payment of invoices or the accumulation of debts are identical. Where appropriate, we may suggest you instruct us to undertake pre-action checks on the credit worthiness of the creditor.
We are proud of our ability to provide complete, efficient and, most importantly, completely legally compliant debt recovery solutions that are customized to your unique circumstances and requirements for speedy, cost-effective and satisfactory result.
We also provide advice as to the prospects of debt recovery if you need to proceed with Court action and take measures to enforce any judgments that you have obtained and assist you in determining the most appropriate method of enforcement in the specific circumstances.
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