Wisely handle debt recovery

Debt recovery can be a tricky area because there’s more than money at stake. Often, there is a value judgment to be made about the person’s ability to pay, as well as willingness. Yes, it is always a debtor’s responsibility to absolve themselves of the loan. However, creditors first need to know a debtor’s financial state before choosing the proper legal course.

Not All Recalcitrant Debtors Are Alike

When family members and friends loan money out to each other, it can seem like the perfect situation. They can avoid a credit check, bank meetings and, sometimes, even interest. The money is available to them quickly, up front and without invasive process and consequences. But money is always tricky when it involves personal relationships, meaning that these more formal institutions can be useful when seeking a loan. When family members or friends want to initiate loan repayment from a recalcitrant debtor, a written notice should be delivered as a first step. But, even before this, it can be useful (for the sake of preventing the friendship or relationship) to understand the current financial situation of the recalcitrant debtor. Is it that they are simply ducking responsibility to avoid repayment? Do they have sufficient funds to live as well as enter into a debt recovery schedule or is their situation more desperate? Are they perhaps disorganized with money and it’s a matter of missing payments? In the case of the latter, an automated payment plan can be set up. Do they currently lack the funds entirely? In this case, there should be a date by when they can and will work towards having at least a portion of funds repaid.

A Guide to Informal Debt Recovery

Debt enforcement sounds like a big and scary situation, especially for the recalcitrant debtor, but it doesn’t have to be so messy for either party. A written notice is less about scaring the debtor and more about establishing a paper trail for further legal action (if it is to even proceed that far). In fact, especially with informal loans, this step is often enough to start a conversation and have the recalcitrant debtor approach the creditor for a process of debt recovery that’s sustainable and fair for both parties. Besides legal means, creditors can also offload the debt collection agencies.