6 steps that a debt collector follow

As a creditor, if you are visiting websites of debt recovery agencies like Cedar financial for your collection need, you should be prepared. You cannot start looking at collection agencies, without understanding the process of debt collection, or the steps that they follow to work with a creditor.

Knowing this is important as it will help you understand the laws and rules, and will make sure that you don’t hire a collector which is not up to the mark or is dishonest. Knowledge is power, and you need to ensure that you don’t sound unprepared when you are making a deal with a collector.

If you are not familiar with the steps that a collector takes to recover money from a debtor, here is the gist of them.

Step 1: Consultation

The first step that all collection agencies follow is giving consultation. It is free of charge, and you only need to call them or drop an email for them to revert. This consultation is helpful because they hear and understand the whole situation and understand the type of debt collection services you require. Once they get a sense of your problem, they tell you your options and work on it.

Step 2: The collector researches the debtor

In the next step, the collector performs his due diligence and research the debtor. He/she not only looks at the delinquent’s file but also performs a thorough research of his financial statements, social media links and so on.

They assess the situation to figure out whether the debtor is capable of paying the debt or not. Or do they need to figure out more aggressive but within the procedures of the law.

Step 3: Sending a letter of demand

A letter of demand is a formal document which the collector sends to the debtor when they get the account. This letter is designed to inform the delinquent about their debt and that if they don’t pay the debt soon, legal action can be taken against them. A letter of demand usually coerces the debtor into paying or at least open a conversation about negotiation.

You can also use this letter of demand to show in court that you made several attempts to contact the debtor but to no avail.

Step 4: Waiting for response

The next step is waiting for the response. After the debtor has been sent a letter of demand, the collector waits for thirty days or so awaiting their response. Whatever the time limit is, if they don’t respond within it, the collector will take further steps. If they respond and ask for negotiation, the steps change accordingly keeping in mind the wishes of the creditor.

Step 5: Filing for a lawsuit

If the debtor doesn’t respond to the letter of demand or your emails and calls, it is time to file a lawsuit. Taking the debtor to court should be a last resort as it is costly and ruins the relationship between debtors and creditors, but it is necessary if the debtor doesn’t respond to any other methods.

Step 6: After court decisions steps

Even if the court makes a judgment against the debtor, they might not pay. In such cases, your collector will advise you further.

Hire a collector who you can trust because they will be your partner in recovering the money that is rightfully yours.

Jackson Gilbert is a Blogger. With his skills, he has been helping fellow marketers and brands worldwide. When not glued to his laptop, he can be found making travel plans that rarely happen.