The Difference between Debt Collection and Recovery


Difference between Debt Collection and Recovery

 

You’ve heard of give and take, but when it comes to financial terms like debt collection and recovery, you scratch your head.

 

Have you given money to someone and they are unable to return it? No matter what their reasons are, you are not answerable to them if you want it back. These are just Layman terms to use, and that’s why it is important to understand debt collection and recovery.

 

You might need debt collection Italy services at some point, so it is best to fully understand what they do.

 

What’s debt collection?

Let’s say there is person A who takes a loan or credit from Person B. Person B will soon get in touch with Person A to make prompt payment. This is known as debt collection. The creditor sends phone calls, emails, and letters to remind Person A that the debt has to be paid in a stipulated time frame. All this happens in-house.

 

Large businesses usually have a specialized department who takes care of debts. They step in the picture only when 30 days have passed. In case the progress is next to nothing, they would need a third party to enter the scene and save the day.

 

This can also be escalated and taken to the courts. Basically, person A needs to beware. It is best to pay well within time else the repercussions will be ugly.

 

What is debt recovery?

So, the creditor or Person B tries to contact the debtor a couple of times. However, Person A does not respond. In this case, Person B or the creditor thinks that a third party can help recover the debt. This is known as debt recovery.

 

The debt collection and recovery agency will get in touch with the person by letter or phone. If this does not work, a court case will be filed.

 

The main difference between debt collection and debt recovery is that in the latter, a third party company enters the picture.

 

Debt collection in Italy: How it works

The first stage is trying to settle the debt in a benevolent manner. This means that you do not need to drag the matter to court.

 

This helps you save time and money, but person A is stubborn and perhaps broke so they might not be able to settle the debt immediately.

 

If this does not work, we move on  to the second stage which is to collect all the information regarding the claim. Keep the invoices, agreement, checks, and other details handy.

 

The third party writes a letter and sends it to Person A. If the debtor does not reply, a second letter goes and this is a form of warning. You need to be aware that different third party companies have different ways of handling matters.

 

In case the debtor refuses to pay at the end, the matter is taken to court.

 

Let Professionals Handle the Case

If you run a large business and do not have the patience and time to contact the debtor, it is best to hire a debt collection Italy service provider. They will handle everything with ease.

 

From mailing, calling, writing a letter, to taking care of the legal requirements – everything is handled by them.