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Debt Recovery Services in the UK

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Debt recovery is the process of collecting an outstanding debt from a debtor. Debtors can be of two types; individuals or companies. A creditor can recover the money by itself through a recovery agency. The latter happens when a business is unable to collect the money by itself. There exists several types of debt recovery agencies and the one a debtor chooses determines the amount he/she/it recovers from the debtor. There exist first party and third party recovery agencies.
A first party recovery agent is usually partly owned by the company to which an individual or a company owes a debt. The company normally has a debt recovery branch used to maintain friendly terms between the business and its clients. A business which decides to run a debt recovery department, can get the division to start following up defaulters relatively early. It may also seek to agree on a compromise or a solution so as to recover their money and also keep possession of their customers.
A third party debt recovery agency is a firm that deals with a collection of debts. However it does not necessarily have anything in relation to the original contract, between the company, which is owed money, and its debtor. The third party recovery agency is usually entrusted to recover debts and is in return paid a small fee or a certain percentage of the debt owned. The agency may claim 10 – 50 % of the debt owed depending on the hired agency and the kind of tactics being used to collect the debts. Most of the contractual terms are “no collection, no free” basis. Many agencies may demand payment if the company cancels the contract before debt collection takes place.
An upcoming practice, whose popularity is growing in popularity, is the selling of debt to a debt recovery agency. In such a scenario, a company sells its debt to an agency at a fraction of the total cost of the debt. The company is exonerated from the debt it was owed. When the recovery agency is able to collect the debt, it stands to make a good profit. However, this method of selling a debt has resulted in deceitful collection methods that compelled some governments to the writing of laws to govern the legitimate collection of debt. For example, in the United Kingdom, debt collection is kept in check by the Consumer credit Act, whereas in the United States, debt collection is governed under the Fair debt collection Act. Also debt settlement trade unions have been set up laws which regulate debt settlement.
Debt recovery is central to business operations. Otherwise, they businesses would lose lots of money each and every year through defaults. Even though a business might quite not recover all its debt fully through the recovery agency, the business is assured of the recovery of its money back. The most complex part of debt recovery is knowing when to cut losses and pass the blameworthy account to the debt collection firm. Eminent agencies engage various resources of tracking debtors. The agencies have access to public databases which assist in investigating debtors activities.


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