CAT / FIA FFM Syllabus F. Credit Management - Collection of debts - Notes ^{3 / 5}

Collectors are legally entitled to attempt to collect all owed debts.

According to debt collectors laws, a creditor can collect the debts he owns on behalf of his own company’s trading name
He can also request late payment charges from the subject
A creditor is NOT allowed to charge the debtor a fee as a debt collection agency (DCA)
This means the creditor is not governed as a legal and registered debt recovery agency, therefore he is cannot charge the debtor DCA’s fees and taxes
A debt agent is NOT allowed to abuse with debtor’s personal information
A collector can communicate with the debtor, using phone calls, emails and personal letters during the pre-legal actions
A debt collector is NOT allowed to contact the debtor at his work place
A debt collector can involve a law representative in the collection process, such as debt solicitors
A debt recovery agency or a creditor can pass the debtor’s case to court (the so-called court proceedings)

Step: Use an internal collector
For the first six month, you usually will deal with your creditor’s internal collector.
Step: Use the help of DCA
Once you have decided that the debt won't be repaid, it will be assigned to an outside organisation, sometimes known as a third-party agency (DCA).
At this point, the debt is still owned by, and owed to, the original creditor.
If the third-party agency is successful in recovering all or part of the debt, it will earn a commission from the creditor, which can either be in the form of a fee, or a percentage of the total amount owed.
Step: Creditor writes off the debt
In the third phase of the process, your original creditor writes off the debt and sells it to an outside collection agency, sometimes known as a debt buyer.
The creditor is no longer involved.
The collection agency is still trying to recoup as much of the debt as it can, in order to turn a profit on its purchase.