Recovering a Debt – 5 Questions to Ask Yourself

Are you considering recovering a debt from a client that is currently failing to make payments?

If so, you may feel a little concerned about the matter as debt recovery can be a lengthy and expensive process that isn’t always guaranteed to work.

This is a fair and justified concern as wasting more of your money when you may not receive payment from the debtor can be damaging to your business.

It is, however, important that you recover as many client debts as you possibly can so that your cash flow and general finances can manage. So where do you draw the line? What characteristics describe a lost-cause debt?

It’s important that you assess your situation effectively so that you can identify any warning signs that the debt may be best left either unrecovered or recovered through an alternative route.

In this article our Australian debt collection agency will discuss 5 questions that you should ask yourself before recovering a debt from a client and how the answers can help you to use your resources appropriately.

How Old is the Debt you want to Recover? 

The first question you should ask yourself before recovering a debt from a client not making payments is regarding the age of the debt.

You see, debts have a certain window in which you can collect them before the debtor is no longer legally responsible for said debt.

In Queensland and most states and territories in Australia, creditors have a 6-year period to take action upon a debt from the last time it was acted upon or acknowledged.

If the debt is not acknowledged within that period, you will no longer be able to collect it from your clients.

Before you begin to spend money and resources on recovering a debt, it is important that you make sure that it is still legally viable for you to collect it.

If not, it is in your best interest to save your time and money and focus on collecting debts from other clients.

The lesson learnt from the situation, however, is to take action on your debts as soon as you become aware that they are unpaid.

Are Your Client Records Up to Date?

Another question that you should ask yourself before recovering a debt from a client failing to make payments is if the records of your clients are up to date.

It is absolutely vital that before you take any action whatsoever that you are 100% sure that you have the correct person's details.

In matters such as debts, privacy is a large factor and any violation of said privacy can result in serious legal consequences on your part.

Your client will trust you with a lot of their personal and private information, such as a home address, workplace, bank account details, and more.

If you happen to call or otherwise contact the wrong person and disclose any of the client’s private details to them, you can be held legally accountable for the violation of your client’s privacy.

Make sure that you double-check that all the information you have on file is still valid and belongs to the client so that you properly abide by debt collection rules and regulations.

Will you Recovering a Debt from this Debtor?

Another key question that you should ask yourself before recovering a debt from a client that is currently failing to pay is whether or not you believe the client will be able to pay their debt.

Some people don’t pay their debts because they don’t want to have to pay so much money when they could instead try to escape it. Some people, on the other hand, don’t pay their debts because they are unable to afford them at this point.

Unfortunately, finances are an ever-changing thing and events can arise in a client’s life that deems them insolvent or otherwise unable to afford debts.

Before you invest your time, money, and other resources into the pursuit of the debt, try to make sure that you will indeed receive a payment.

If not, you may wish to instead engage in alternative methods, such as negotiation.

Recovering a Debt from a Missing Debtor?

Another key question you should ask yourself before deciding to pursue a debt with an unpaying client is whether or not you can actively locate the debtor. If your client is trying to avoid their debt, they may decide to flee the area to do just this.

Alternatively, people may simply move on with their lives and move away from their previous address and forget to let you know as their creditor.

Either way, not being able to locate a client that isn’t paying their debts is a big issue.

here are, fortunately for many creditors out there, ways that you can go about locating those who have changed their key details, such as their address, without informing you first.

This process is called skip tracing. Skip tracing involves using various public records and domains to search for a client who is trying not to be found.

There are ways that you can do it yourself, but you are better suited to hire a professional who will likely find much more success doing this than you will as a creditor.

They will also generally subscribe to other sites that can help to find people, meaning the range of information that they can access will likely be much larger than yours.

How Will You Recovering the Debt?

Finally, working out how exactly you are going to collect the debt is another great question for you to ask yourself when you are considering recovering a debt from an unpaying client.

There are several means of collecting a debt, and it is wise for you to select one before you begin the recovery process.

You may wish to take legal action through litigation or use some alternative dispute resolution techniques, such as mediation or arbitration, to collect the debt.

Consider Using Debt Collection

Have you tried everything to collect a debt from a client to no avail? Or are you simply looking for an easier way to collect debts from unpaying debtors?  Either way, you may want to begin to consider debt collection.

A debt collection agency are professional in the field of debt recovery and can, therefore, collect debts from clients with much higher success rates than you may be able to as a creditor.

They can also take the weight of collecting debts off of your shoulders so that you can focus on growing and expanding your business. Try debt collection today!

Do you have unpaid business invoices or debts to collect?