What is the Debt Collection Process?

What is the Debt Collection Process

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by Rose Flores, Account Executive, Debt Recoveries Australia

If you have recently outsourced to a debt collector, or have been contacted by one, you must be asking yourself – what is it that debt collectors actually do? Don’t worry, we get that a lot. Here is our step by step process for debt collection.

Initially, the debt collection process starts when a debtor fails to settle an unpaid account with a creditor. Debt collection enables creditors to recover outstanding debts without incurring additional costs. Our clients outsource their debts to us and we collect a commission upon claim. Our clients may not have time to collect the debts themselves, so they outsource to  debt collection professionals.

As a debt collection agent, I have summarised below some steps we normally follow in our debt collection process.  Take note that many cases are unique and may not necessarily observe  this procedure:

      1. To collect as much information as we can to locate the debtor and understand more about the debt. Sometimes, a debtor will be unaware of an outstanding debt and will only know it exists once a debt collection agency gets in touch with them. A common reason why a debt may be transferred to a debt collection agency is primarily because the creditor could not reach the debtor. This can occur either the information provided were not updated or incorrect contact information in their files. We will try to obtain accurate and complete records using advance skip-tracing tools and even private investigators, in order to obtain the updated contact details.

      Having problems with your debt collection? Input your email below for free consultation!

      Call Debt Recoveries Australia on 1300 799 511 or email us at email@debtrecoveries.com.au

      For legal matters contact ADC Legal on 1300 799 820 or email at email@adclegal.com.au

      1. To contact the debtor and try to collect the outstanding debt. Communication is usually made by postal mail, telephone or email. We formally demand repayment and give a time frame of 14 days, to either settle the debt or contact our office for negotiations. The debtor is advised that no response may result to take further action. Usually payment is made by this time, or a liquidation arrangement is in order.
      2. If we are unable to make contact, follow up our initial contact attempt by postal mail, telephone or email. If we still haven’t received any response or repayment within the given time we can send a final notice letter, which advises the debtor that ignoring the matter could result in a court judgment. This letter will outline potential consequences of a court judgment such as changes in your credit rating, seizure of property, and bankruptcy proceedings.

    see also: How to write a Pre-Legal letter of demand for Debt Collection

    1. If in case we are unable to make contact, despite numerous attempts, use a number of tools at our disposal to obtain up-to-date contact information of the debtor. Some other avenues that are explored may be conducting enquiries into the owner of a property or vehicle, sending out a field call agent, or hiring a private investigator. These actions may incur extra charges and depending on the circumstances of the debt, our client may be able to include these costs on top of the original debt amount, for that matter. As a result, we believe that it is in the interest of both the debt collection agency and debtor to work together as ignoring debts do not benefit either party in the long run.
    2. Legal Action. In this stage, we have not been able to contact the debtor or agree on payment terms. With our client’s instruction, we can issue a Legal Letter signed by our solicitor to provide a final written warning before recommending litigation. This letter will again outline the possible consequences of non-payment and advise that any additional costs that are incurred may be added to the debt owed.


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    Our client usually has the right to pursue debts through courts, in other words creditors may sue you for the debt. These legal proceedings can take longer than expected and can significantly increase the size of the outstanding debt.

    How long will the collection take?

    We can never predict or give an estimated time of completion as we never know how long it will take to collect the money owed. The debt may be settled either after the first step, second or third and may even reach the final step. Other debtors who are under a payment plan can stop due to financial setbacks or health issues and may contact us again to continue with their obligations once they have recovered. However, we will always try to work with the debtor to find a suitable payment plan that will benefit both the client and the debtor.

    What should I do if contacted by a debt collector?

    We advise you to respond as soon as possible. If you are not aware or uncertain about the debt, you should contact the collection agency for further information or perhaps request for additional time to validate, although within a reasonable period of time. You can also seek your own legal advisor or speak with a financial counselor to help you resolve this matter. Go to Financial Counselling Australia’s website.

    How do I know if the collection agency is not a scam?

    We will only contact you when it is necessary to do so. When it is made for a reasonable purpose such as, making a demand for payment, making arrangements for repayment, finding out why an agreed repayment plan has not been met or reviewing a repayment plan after an agreed period of time.

    Here at Debt Recoveries Australia, we are not just a debt collection agency but also a credit management agent acting on behalf of our clients.  To ensure we are committed in providing a quality service, we make sure that we act within their scope and ensure our company is compliant with the Australian consumer law and the ACCC debt collection guidelines.



    Debt Recoveries Australia is the expert at recovering your outstanding debt without the drama. For more information, email at us email@debtrecoveries.com.au or call 1300 799 511. Talk to us about your debt collection concerns via Skype at debtrecoveries.

    free-consult-debt recovery australia

    Email: email@debtrecoveries.com.au

    Call Us: +61 1300 799 511

    Adam Stewart - Debt Collection Expert
    About the Author

    In 2002, Adam Stewart established Debt Recoveries Australia Pty Ltd, a debt collection agency specialising in the insurance claims industry.

    Adam has worked in the fields of motor vehicle insurance and debt recovery for over 12 years, working with some of the largest insurance and debt recovery companies in Australia. Read more

    4 Comments on “What is the Debt Collection Process

    1. I have been working in a collection agency for 2.5 months I really like the job but I can’t get my cm to stay on the phone past hello, inbounds call and hang up when they realulize the phone has been answered,help

      • Hi Mary. If they are ignoring you, perhaps try ringing them at work? Otherwise, try emailing, texting, social media messaging or just issuing legal proceedings.
        Hope this helps.

    2. Hi Mary. Controlling the call from the beginning is the key.Instead of immediately telling them that you are from a debt collection agency, give your name and that you wish to discuss a matter relating to ……

      • Don’t make call to any debtor / customer unless you are 100% sure about the debt you are about to claim. Study the case properly before making any call and keep all the supporting documents such Statements, Invoices etc handy.

        Start the call by saying
        my name is xyz
        then ask can I speak with Mr. / Mrs. / Ms XYZ
        Make sure to showcase your confidence and grip over the debt collection and legal processes throughout the call.

        It is always better to do some search / tracing about the debtor current work place, residence and family & friends.

        Don’t jump to threat of legal proceedings in very 1st call except in some cases customers / debtors are less bother about anything so in such scenarios you can give them threat for legal proceedings.

        Hope it will help you in some way positive.

        Kind Regards,

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