Some Widely Used Debt Terminologies and Their Meanings

Bill payments and managing finances along with debts ain’t an easy task. And if you are someone who struggles with complex debt terminologies, it is only going to get tougher. There are times when you also might get confused between debt collection services and credit bureaus. There are various terms that banks use which might leave you perplexed. To make it a little easier for you, we have discussed some widely used Common Debt Terminologies.  

• Credit Report- A credit report is a document that contains details about your credit history and current credit position, such as loan repayment history and account status. Credit reports include details like personal information, credit line details, public records such as bankruptcies, and a list of businesses that the consumer owns. The credit bureaus compile this information in credit reports. The majority of individuals have multiple credit reports. 

• Debt Collection- The process of collecting debts owed by individuals or corporations is known as debt collection. A debt collection agency or debt collector is a company that specialises in debt collection. There are various companies working as agents for creditors. They collect debts in exchange for either fees or a fixed share in the remaining amount. Debt recovery and debt collection are similar phrases with one significant difference. The distinction lies in who is attempting to collect a debt. Debt collection services operate at different scales, varying from operating independently to functioning for attorneys. 

• Annual Percentage Rate- The APR (Annual Percentage Rate) is used to calculate the annual total cost of credit. It considers the amount borrowed, the interest rate(s) as well as the amount and time of payments. APRs can fluctuate based on several factors, such as broader market movements, the account holder's actions, and other variables. 

• Credit Limit- The phrase credit limit refers to a financial institution's maximum amount of credit to provide to a customer. Generally, the lenders set the credit limit, which solely depends on the information provided by the credit applicant. A credit limit impacts consumers' credit scores and their capacity to receive credit in the future.

• CFPB-The Consumer Financial Protection Bureau (CFPB), also known as the Bureau of Consumer Financial Protection (BCFP), is a US federal body responsible for financial consumer protection.

• Debt Consolidation-  Debt consolidation allows one to manage several debts all at once. It allows the users to combine several debts into a single loan, given they are paying multiple debts. 

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Business Information Report: Everything you need to know

Business reports, regardless of size or industry, are vital tools for any company. They allow you to track and analyse the performance of the company, as well as uncover areas for improvement and growth potential. A method of borrowing money with an understanding that the borrower will pay later is called credit. Buyers and suppliers can both apply for credit. The buyer does not pay for the goods right away but rather over a specified period of 30-60 days for providers. In India, the companies that act as an observer for your credit are called Credit Report Services India. 

What is the Business Information Report?

When you owe someone money, you are subject to credit chance, which is the risk of losing money if they do not repay you. When you run a business, you deal with different people and have exposure to different credit risks.

Whether buyers or suppliers pose the risks, the only way to minimise them is to have a clear, up-to-date understanding of each organisation's risks. To accomplish so, companies use a Business Information Report to gather data. 

What are the benefits of a Business Information Reports?

• A business information report includes financial statements, lines of business, payment terms, the company's history, ownership data, operational information, negative occurrences, legal cases, and details on linked firms and any noteworthy events involving the company's management in the past.

• When checking out a potential business partner, business information reports are a valuable tool for ensuring compliance. A compliance report can assist you to figure out whether any of your business partners are committing financial fraud. 

• The primary purpose of a business report is to provide a critical assessment of a company's performance across all the departments. They are crucial tools guiding the process of decision-making and providing opportunities for business owners and senior management to explore and resolve any concerns.

• Business information reports are also beneficial for debt collection services. Accessibility to all the related information can help debt collection companies avoid reputational, operational, financial, and legal issues. In addition, the data can assist you in determining loan terms, evaluating distributors, agents, buyers, and suppliers, calculating profitability, and evaluating new customers.

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What are the challenges faced by debt collectors?

The process of debt collection can be exasperating and bothersome, especially if there is no coordination and communication between the debt collector and debtor. Private companies are often hired by creditors to collect overdue payments on their behalf. Such companies are called 3rd party debt collection agencies. According to Credit Reports, India, the majority of challenges faced during the process of debt collection arises from faulty written agreements, oral contracts and failing to make payments at the required time, etc. Despite the availability of surplus information, debt collection services India are facing multiple challenges due to changing technology, legislation and demographics.

Let us look into a few such challenges faced by debt collectors-

Unavailability of updated information about the debtors

In quite a few scenarios, many debt collectors waste their time calling debtors who have already paid off their debts. If there is no updation of information regarding debtors who have already paid their dues in the public and digital record, it can lead to wastage of time and money for both borrowers and debt collectors. 

 

Oral contracts and faulty written agreements

In India, many creditors enter into an oral contract while lending money to the required customers. Since written records are not available, debt collectors face difficulty retrieving the given amount from debtors because there is no evidence. Moreover, it will be more burdensome to pursue legal action because of the unavailability of tangible records. Similarly, poorly drafted written agreements can also cause problems for debt collectors. Vague and suspicious terms in the contract can be used against the debt collectors and creditors. It can also lead to the cancellation of the contract causing a loss of money and time for the debt collectors. 

 

The bankruptcy of the borrower

In the process of debt collection, when money is lent to the debtor, collaterals are kept for the safety of the creditor. Hence, after attaching the asset or getting the collateral, the creditor has the right to receive money. However, if the debtor becomes bankrupt, the debt collectors face a tedious challenge while recovering the indebted money. 

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What are the rights of a debtor in India?

A debtor, also known as the borrower, is a legal entity that owes money to individuals or financial institutions. The individuals or financial firms that lend money are called creditors. In the process of debt collection there is always a formal agreement between the creditor and debtor regarding the payment, period, discount deals, etc. Failure to uphold the terms can lead to fines and penalties. Moreover, if the debtor fails to pay or keep up with the terms of debt collection, creditors can bring them to court for judicial action. However, if a debt collection agency deploys unethical and dishonest methods during the process of debt recovery, debtors can sue creditors for unfair debt collection practices. 

Let us look into a few such rules and regulations that will protect debtors from unethical debt collectors-

1. A debt collection agency cannot abuse, or harass or humiliate the debtor using obscene or profane language. Both debtor and creditor must be treated with respect and dignity. There should not be any use of violence or threats in debt collection practices.

2. Unless it is the suggestion of the debtor, a debt collector should only call the borrower between 7 AM to 7 PM.

3. A debt collection agency cannot misrepresent the overdue amount or claim false allegations against the debtor. 

4. There should not be the usage of unfair debt collection practices against the debtor. For instance, debt collectors cannot collect undue payments or fees from debtors. 

5. There should be respect for the privacy and personal space of a debtor. Physical distance must be maintained between the debt collector and borrower without invading their privacy in the process of debt recovery.

6. The terms and agreements of debt collection should only be discussed with the debtor or co-signatory. A debt collector cannot discuss the terms with anyone else besides the borrower. 

7. A debt collection agency should only meet the debtor at the billing address. Unless an alternate address has been provided by the debtor, debt collectors cannot visit them at their workplace or any other venue. 

8. All questions and doubts about the terms of debt collection must be answered by the debt collectors. If the debtor requests to speak to the supervisor, his request must be complied with by the debt collector. 

9. If a debtor is lagging behind the payments, the creditor can call the debtor at a reasonable frequency to inform about the payment history and overdue amounts. However, calling multiple times or back to back calls are not encouraged and can be considered harassment. All calls regarding the debt collection must be recorded and logged by the creditor. 

10. A debt collector must seek permission and look for the convenience of the borrower to converse about the overdue payments. Debt collectors cannot force their way into a conversation with debtors.  

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Unfair debt collection practices you should be wary of

Repaying your loans and credit card EMIs is very important and needs to be prioritised. But under certain unforeseen circumstances, it can get difficult to pay back your dues. Such instances inadvertently put you at the receiving end of a debt collection agency. While the experience of being in debt can cause a blow to your credit reports India certain other factors might worsen your situation. Here are some unfair debt collection practices that you need to be wary of if you miss out on paying your dues.

False pretence of being a government official

It is common knowledge that people are more prone to listen and follow instructions if the one giving them is a government official. This could be the reason why a debt collection agent might falsely claim that they are also a part of the government even when they are not, so they can make you pay your dues back quicker. You must try not to fall for such gimmicks.

Harassment to get money

A major factor that you should be aware of and take action against is if the debt collection services appointed by your creditor threaten to become violent, use obscene or profane words, or participates in any other criminal activity that could harm your personal well being and reputation. You are liable to receive warnings via calls, messages, or emails that ask you to pay your dues, however, any kind of harassment to your physical and mental health in that prospect is not acceptable.

The threat of an arrest

When you are indebted to the creditor, it might be easier to believe that you could be arrested if you do not pay the dues back on time. While the process of debt recovery includes legal letters, it does not mean that you can get imprisoned directly without any legal conflict. Whether you have personal debt or your business is lacking in paying its dues, make sure to check your accounts or business information reports and pay the receivables on time to avoid any legal battle with the creditor.

Looking for the most profitable and suitable proposals from your debtors? Hire our expert debt collectors today!

Top Debt Collection Agencies in India

 Debt collection is a procedure that involves the unprejudiced and ethical pursuit of delinquent amounts and past-due payments from indebted individuals or businesses on behalf of the creditor. These delinquent amounts include unpaid bills and overdue loans like credit cards and utility bills as well as automobile and student loans. Creditors hire private recovery agencies to collect debts in the majority of the cases. If there is the involvement of a debt collection agency the whole process of debt recovery falls under the interlocutory debt collection procedure. The laws and regulations followed by debt collection agencies vary in different countries. 

However, in case of complications, credit report services India and debt collection agencies rely on lawyers for negotiations. With regards to debt collection service India the recovery procedures are pretty simple and rapid. Debt collection agencies in India have skilled debt collectors and attorneys for the faster procurement of payments from debtors. Here are few debt collection agencies in India-

ARRMS (India) Private Limited

By focusing on strategically timed and proactive legal action, ARRMS (India) Private Limited provide complete debt recovery solutions. They also adhere to all regulatory, judicial and statutory guidelines. They rely on traditional debt recovery methods like telecalling and field visits with interlocutory interventions. 

Direct Recovery Associates Inc

They have the highest debt collection record in the industry. Their branches offer commercial debt collection services all across India as well as in the United States of America. They have high success rates because their debt collection standards are based on the principles of persuasiveness, persistence and professionalism.

The EOS Group

The core activities of the EOS Group include receivables purchasing and debt collection. Even though their headquarter is in Hamburg, Germany, their outlets operate in more than 25 countries. Their expertise is a fusion of national and international markets with a broader focus. 

Afford Motors India Pvt. Ltd.

Founded by Mehar Yadav in 1996, Afford Motors India Pvt. Ltd. is one of the efficient and well-established debt collection agencies in India. The agency offers comprehensive debt recovery methods along with receivables management solutions. 

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How to deal with third-party debt collectors?

Having overdue credit payments is a stressful aspect, which worsens when your creditor hires the services of a 3rd party debt collection agency. You might start getting calls, messages, and emails regarding your payment. If not handled correctly, agents might even visit your address looking for payment. In times like these, you might find it difficult to manage the situation, while also trying to pay back the due amount. So what is the right way to handle a third party debt recovery agent? Let’s find out.

Do not ignore 

You might tend to avoid the calls or any sort of communication made by a debt recovery agent. However, that could worsen your credit scores and might also push the recovery services to opt for stringent measures if you haven’t started paying the dues back.

Do not pay without knowing all facts

There is a possibility that you will feel the need to pay the dues back as soon as a debt recovery service professional contacts you. You might even pay according to the amount the person tells you to pay. But such a step is not advisable. Paying your dues off on time is always recommended, but you should understand the complete facts about your debt before making any such decision. The debt recovery agent is trained to get receivables from debtors in minimum time, so they might convince you to pay sooner or more than required. Get as much information as possible, know the repercussions of the payment, then start paying back accordingly.

Do not believe only in oral communication

If you make a deal with the debt recovery agent regarding your dues, ensure that the agreement is made officially in writing, so there’s a paper trail. However, try to avoid changing the terms of the original credit agreement as best as you can, or your score under credit reports India, can get impacted negatively.

Looking for the most profitable and suitable proposals from your debtors? Hire our expert debt collectors today!