When the creditor hires a debt collection company, it means that they are determined to recover their debt. The debtors assume that they will certainly refer the case to court. As a result of such thinking, a lot of debtors avoid any contact with the debt collector. Acting in this way to their detriment, they close the route to amicable solution of the case.
In the majority cases, a professional debt collector wants an understanding with the debtor. Therefore, they will try to determine the reason for occurrence of the liability with the entity that failed to pay the receivables. They may also propose spreading of the debt into instalments and the deadline for their repayment. Against common opinions, the debt collector does not want the entrepreneur to get into bigger debt. Just the opposite – they want to help in financial repayment. The debt collection activities are conducted with focus on recovery of the receivables and do not have the nature of a sanction against the debtor.
The parties may develop the arrangement themselves or may use a professional negotiation tool being mediation. Such solution provides for presence of a third party, not engaged in the conflict, that will look at the problem from perspective and propose solutions that are beneficial for both parties. It is one of the reasons, for which the entrepreneurs prefer to hire the debt collector for dispute solution. Apart from that, the mediation process lasts much shorter than the court proceedings. The debtor that wants to pay the receivables efficiently will certainly appreciate this solution. Additionally, contrary to the court process, in which we submit ourselves to an authoritative decision of a judge, in the mediation process we have full control over its course and completion. The debtor and the debt collector agree on a comprise that is beneficial for both parties and sign a relevant agreement relating to payment of the debt.
Mediation is the cheapest way of solving of conflicts. It is commonly applied in the field of disputes between business partners, in particular in case when they relate to payment of receivables. Solution of the dispute by means of mediation does not exclude further cooperation of the business partners. The key aspect for commencement of mediation is mutual will to head off the conflict. Mediation is voluntary and everyone is entitled thereto. The mediation process is ended with a written agreement between the debt collector and the debtor. It determines the terms & conditions of the understanding and is limited in time. If the entity being in default with payment of the receivable fails to perform the agreement, the case may be referred to court.
Amicable solution of a conflict should not be deferred for too long. The patience of the creditor has also its limits. The decision on establishment of contact with the creditor or with the debt collection company hired by them should be preferably made at the beginning of the conflict in order to avoid the costly, time-consuming and stressful court proceedings.
Published on: 9 November 2016