“How does the debt collection process work?”

Many of my clients have never hired a collection agency before. They are curious to learn how the process works. To me, this question is a good sign, because it shows that I have a customer that wants to partner with me for optimal results.

The debt collection process is at the same time simple and complex.

Your customers will receive an initial notification of debt, which will include basic information on the debt and how to pay it. For debts owed by consumers, the letter will advise consumers’  rights if they wish to dispute the debt. Telephonic contact usually works in tandem with written notice.  So far, the process is simple, and some people pay quickly after being sent to collection. If they do not, the process becomes more complex.

Debt collection involves a good deal of negotiation and documentation. If we convince someone to enter into a payment plan, we always document that plan. We manage those payment plans, and follow up on missed payments.

Often, we have to research to find new contact information on debtors to find a new phone number or address. This research, called “skip tracing” is key to successful debt collection. Research is also used to determine if a debtor has assets to pay the bill, if they have other pending litigation and to find other information that will drive the strategy to get the debt paid.

Reporting to credit bureaus could be another part of the debt collection process, but it is certainly not the most important part.  A consistent and persistent effort that combines different actions is what works.

You can and should be part of the debt collection process, even after you have submitted the accounts to your agency. You should stop sending statements and direct any inquiries to the agency. If you find out new information on the debtor, make sure to pass it on to the agency.