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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