How To Get A Better Outcome When Collecting A Debt.
Introduction
Dealing with debtors can be a tricky thing. It is important to get the right balance between firm and understanding and ensure that you have all the information you need to collect as much of the debt as is reasonable in a timeframe that suits both you and the debtor.
In order to help you get the best outcome when collecting debt, we’ve put together some suggestions and strategies to help you on your way.
Struggling with unpaid debts? Start recovering what's owed to you today.
How To Work With Your Debtor
Communicating with your debtors can be a complicated and involves nuance and an understanding of human nature. In the first instance if you are engaging in phone calls with the debtor then we would recommend these tips for helping smooth communication.
· Listen to your client. They will be more cooperative if they feel you are trying to understand their situation and it will help you judge what steps are needed next.
· Explain clearly what is owed, to whom, and what the options are for how to proceed.
· Remain professional and calm throughout without being threatening or making the debtor uncomfortable.
It is also important for debtors to have a variety of ways of engaging with you. Many people will avoid phone calls from people they don’t know or when they are anxious about debts and what the calls may entails. Having a system that allows the debtor to email you or chat online will allow more people to get in touch than if it all had to be carried out over the phone.
Similarly having payment options available instantly on the website will encourage more debtors to pay something straight away and therefore lowering the need for you to contact them, which benefits you both.
Getting A Full Financial Disclosure
It is important that you get the full picture of the debtor’s current financial situation so that you can calculate and work out what steps should come next and what action should be taken.
It is wise to encourage your debtor to provide a full statement of all incomings and outgoings that they have currently as well as taking any information that they have on how their situation might change in the coming months.
You may find that a debtor is starting a new job in a month or so and will have an increase in earnings and including this in the full financial disclosure will allow you to get a better view on the affordability of any repayment plans as well as allowing some flexibility with amounts.
You can offer to take their financial information over the phone if they are not confident with technology or do not have another way to submit it, but it is useful to have built in software on your website that has common categories for income and expenditure that does the calculations automatically for you.
A full financial disclosure should include details of any other debts including priority debts such as rent and council tax as well as expenses that occur day to day such a school uniform for their children or food shopping. There should be a reasonable quote allowed for essential day to day supplies as well as major income and expenditure.
Making Reasonable Repayment Arrangements
Getting your debtor signed up for a continuous repayment plan is the ultimate goal in order to clear the debts and make a profit but it is important to consider the affordability of any repayments and check that the debtor can really afford that much for the duration needed.
If a higher repayment is offered but the debtor starts missing payments and stops altogether then it is likely that the repayment was too high in the first place. In this situation more would have been gained from taking a lower repayment over a longer term. The more manageable the repayment the higher chance there is of it being regular and of the debt being paid off.
It is also important to remember that debtors do deserve to live within their means in a way that is comfortable for them. If your debtor suggests they can cut their food budget to pay you more than this would not be a reasonable repayment arrangement.
What a reasonable repayment is subjective and something that should be a compromise between yourselves and the debtor. Different situations and family setups will require different levels of expenditure and it is wise to ask the opinions of your debtor to see what they feel is reasonable taking into account their own situation as well as what they owe.
Getting All Of Your Debtors Contact Information
Being able to contact your debtor is of utmost importance if a collection is going to be successful. Having one piece of contact information for a debtor is risky. People move house, change their mobile phone numbers, or get locked out of email addresses. If you ensure you have all of the contact information for your debtor, then you will have alternate means of contact should one of your methods fail for any reason.
At DebtTrace we offer a reliable and accurate debtor tracing service whereby we can get you the full and complete contact information for your debtor and we specialise in debt tracing and tracking. We complete 98% of traces within 24 hours providing you with all the information you need to initiate contact and begin the process of a successful resolution.
As well as gaining contact information we are also able to find out other information about your debtor such as previous debts, CCJ’S and any property ownership. This wealth of information will help you to decide how much the debtor litigation is worth. We are also able to check the employment history and information of a debtor so that their statement of financial affairs can be verified.
All of this information will give you a full picture of the debtor’s situation and the ways in which they can be contacted making any action you take far more likely to be successful.
Working Together For A Win-Win Resolution
Whilst in an ideal situation a debtor, on having contact with you, would immediately pay the full amount they owe, and the case would be closed. However, we know that people don’t get into debt troubles on purpose and that if people have a lot of disposable income, enough to instantly pay off a debt, then they aren’t likely to be those who are taking on the debts in the first place.
The second-best resolution, and the one that is most attainable and should be aimed for, is for a payment plan to be agreed that is affordable and practical for the debtor, taking into account their circumstances and financial situation and one that allows the recovery of money gradually but consistently.
Providing the debtor and yourselves work together calmly and consider all possible issues, then the debt recovery process can be a win-win situation for both parties involved. The debtor will be less stressed and feel more in control and you will be receiving repayments that you know can be afforded by the debtor and that will help clear the outstanding balance.
Struggling with unpaid debts? Start recovering what's owed to you today.
Resources
Get a debtors financial information