In debt collection, there are instances when debtors or borrowers are unable or unwilling to settle their account, and creditors would have no choice but to use legal measures to resolve the delinquency. Some of the steps they could take are the following:
Demand letter
Before any form of litigation or legal processes is undertaken, a demand letter should first be sent to the debtor with the hope that a voluntary payment is given. Hiring a collections attorney or agency is a creditor’s best bet as the debtor would most likely take the request for payment more seriously when help from a third-party expert is acquired. The demand letter could also provide alternative resolutions to the delinquency.
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Investigative work
Consumer debts, which are governed by the Fair Debt Collection Act, have much more restrictions when it comes to collection, limiting what creditors can do in finding ways to collect payment. In commercial debts, though, businesses can legally use several investigative tactics that can help identify the current location of debtors and uncover any hidden assets they might have.
Litigation
A debt recovery lawsuit can be filed if debtors continue to avoid paying their liabilities to a company. If there is sufficient proof that a debt claim is valid, judicial bodies can use different tools to force collection, including securing liens on properties, garnishing business assets, or placing a levy on financial assets.
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