What does debt collection mean?

Process of debt collection

Process of debt collection

The collection of claims is also described here with the term debt collection. This is usually about longer outstanding claims for payment, which are now recovered by a corresponding collection agency. As a rule, collection fees are payable for these services, which are ultimately to be paid by the debtor. Those who deal with the recovery of outstanding debts will know the term claims management. The collection also falls into this category. It is important to know that collection agencies always act on behalf of third parties between debtor and creditor. Debt collection agencies thus take care of demands that they do not affect themselves. See http://www.nmmisolutions.org/resolve-your-debt-problems-with-payday-loan-consolidation/

Assignment of outstanding claims

Assignment of outstanding claims

Anyone who hires a collection agency, the kicked off the open claim. “Debt Collection” is a legal service that must comply with the Legal Services Act. Strictly differentiate from this term is the similar procedure from the so-called factoring. Here, too, claims are passed on, but sold directly to the factoring companies. Debt collection agencies take over the recovery of outstanding claims against a fee, also referred to as a commission.

In many cases, a creditor does not want to sell his claim, but still remains the holder of the claim. The creditor then only gives the creditor a direct debit authorization or the permission to collect money in his name. The collection agency acts as a representative in his name. Of course, creditors should be careful to work exclusively with collection agencies that have the necessary approval. Local debt collection agencies can be located at the competent Land and Local Court.

Information required for collection

Information required for collection

Individuals facing unpaid debts must be informed about the involvement of a collection agency. After all, not all claims of creditors are rightly pronounced, so private individuals must always have the opportunity to defend themselves against the recovery. Incidentally, this also creates the difference to factoring, because here, debtors do not have to be informed about the change of creditor. Debt collection agencies inform the debtor of the levy immediately after transfer. The person of the principal, the reason for the claim, a current date of the conclusion of the contract and the indication of the circumstances under which interest rates are claimed must be evidently contained in the first letter. Anyone who has received a collection letter should first check these aspects.

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