Is such situation, in which the debtor becomes the client of the company that has been conducted enforcement actions against them, possible?
In theory, such situation seems to be rather improbable. The debt collector and the debtor are usually on antipodes of interests. One wants the other to do something that the other does not intend to do. Such tug of war, which the debt collection process sometimes is, is accompanied by strong and usually negative emotions. Hypothetically, since in practice the debt collector is not engaged personally and this is why there cannot be any emotions from their side.
A professional debt collector must have wide legal and economic knowledge as well as must know the techniques of negotiations and psychology, which help in defusion of the tension. It is very important from the point of view of the client ordering the debt collection that does not want to lose the chances for further cooperation with the debtor as a result of the conducted actions.
Therefore, the task of the debt collector is to exhaust all possibilities of amicable receipt of payment, through e.g. conclusion of a settlement, proposing of the payment schedule and if needed, proposing such financing to the debtor that will make it possible for them to pay the debt. More and more debtors are aware of the fact that a failure of amicable debt collection means a court process, as a result of which the order for payment is issued and the enforcement is instituted. The debt will be increased by the costs of court proceedings and by the costs of debt collection actions, which currently, in compliance with the Act, may be transferred by the creditor to the debtor.
Coming back to this apparently rhetorical question, the answer is: ‘Yes, in practice it happens very often – when there is no bad will from the side of the debtor – that the cooperation between the debt collector and the debtor becomes a business relationship’.
The debtors order collection of their own debt to the company that has been conducting the proceedings against them, they sell the debt to it and sometimes even become the clients of the factoring services. For the entrepreneur that has lost the financial liquidity already once, cooperation with a specialised debt collection company may constitute support in management of the financial risk of the enterprise.
Every entrepreneur that lost the financial liquidity at a given moment, sometimes due to the fact that their customers failed to pay the receivables, may become the debtor. Using the resources, operating capabilities and know-how of the debt collection company, they may recover the lost financial liquidity.
Published on: 14 March 2014