Debt recovery refers to the process used by creditors to collect on past due balances owed by individuals and companies.
Key Stages of Debt Recovery:
- Soft collection efforts include phone calls, emails and letters requesting payment
- Third-party agencies may be retained to locate debtors that have since relocated
- Legal remedies like filing claims in small claims court or bankruptcy proceedings pursue enforcement of undisputed debts
- Property liens and wage garnishment orders instigate repayment from identified income sources or assets in severe delinquencies
Example Strategy:
Facing rising defaults, the credit union overhauled their recovery tactics, shortening response cycles and leveraging alternative data to pinpoint debtors’ resources before balances spiraled out of control.
Key Takeaways:
Practicing escalating recovery protocols within all compliance requirements maximizes returns on outstanding accounts, while rehabilitation alternatives benefit borrowers with short-term financial difficulties.