Is your business suffering due to negative cash flow and bad debt? If YES, here is how to sell debt to a collection agency and get your money back guaranteed.
If you are being owed by people and you are finding it difficult to collect the money; then you have the option of selling off the debt to a debt collection agency or enter an agreement with them on the sharing formula once they are able to help you collect the debt.
The truth is that most people are not skilled in collecting debts from their debtors that is why it is important to sell off the debt to a debt collection agency ,so that you can at least recoup some of your money.
What are the Reasons for Bad Debts?
There are several reasons why it is difficult to collect your money from your debtor. It could be that they are your family members or close friends and you don’t want the existing relationship between you and them to go sour. It could also be because you are engaged with other business or activities that make it impossible to spend time to go after your debtors and it also is that you have relocated or your debtors have relocated.
The bottom line is that no matter the situation you find yourself as regards people owing you, you can still get a good chunk of the money of you sell the debt to a debt collection agency.
Debt collection agencies are trained on debt collections and they carry out their duties as core professionals. A good number of the people who are involved in debt collection business are lawyers; they understand how to collect debts from debtors without violating consumer protection laws.
Table of Content
- Facts You Must Know Before Handing your Debts to a Collection Agency
- 1. Critically Examine the Debts You are Owed
- 2. Scrutinize Your Debtors and Compile Detailed Information about Them
- 3. List and Check up All the Debt Collection Agencies within Your Reach
- 4. Make Your Choice of the Collection Agency to Use
- 5. Prepare a Comprehensive Documents / Report of Your Debtors
- 6. Read and Understand Their Terms and Conditions before Signing any Deal
- 7. Handover the Details of Your Debtors to the Debt Collection Agency
Facts You Must Know Before Handing your Debts to a Collection Agency
Debt collection agencies are versatile and they collect all forms of debts like credit card debt, medical debt, automobile loan debt, personal loan debt, unpaid utility bills et al. Some collection agencies are specialized and will only take on a certain type of debt.
For instance, some debt agencies may only try to recover debts that are not less than $200 and that have not exceeded a period of two years.
Some agencies also buy debts out rightly from the original owner of the debt. For instance, the original creditor may feel that the chances of recovering a debt are very slim or that he has no interest in trying to exert effort to get back the debt, he may sell the debt to a debt buyer.
The original creditors usually package together many debts and then sell them as a group. The older a debt is, the lower the price of purchasing it. In fact a debt buyer may spend just $50 to buy a delinquent account that has over $1,000.
Debt collection is supervised and monitored by the various Federal, State and Local Government regulations. Usually, a debt is said to be non-collectable by most businesses when it reaches 180 days old. What this implies is that when the debt reaches the 180 day mark, the corporations will have to either move this debt to the back burner or write it off.
Small business usually cannot afford to keep writing off debt and totally losing out from such deals. If you have tried your best to recover debt by using friendly reminders, informal negotiations, and letter of demand, you may have to resort to the use of a collection agency which can step in to help you to buy your debt for an amount that is lesser than the actual value of the debt.
This is doubly advantageous in the sense that it will reduce the amount of money that the business will lose and will also free you to pursue your business instead of wasting your time and effort to collect a debt. So if you have delinquent debt and you want to sell it to a debt collection agency, then you need to follow these surefire tips;
7 Practical Steps to Sell Debt to Collection Agencies
1. Critically Examine the Debts You are Owed
If you are tired of going after your debtors without any positive results to show for it, it will be to your best interest to sell off the debt to a debt collection agency. It will give you peace of mind and you will be able to reclaim some of your money with little or no stress on your part.
But, before you sell the debt you are owed to a debt collection agency, it is better that you critically examine the debts before you eventually sell them off.
The truth is that in some cases you might just have to change strategies and you will easily collect the debt. But if it is obvious that you might not be able to collect the debt, then it will pay you to sell the dept off to a debt collection agency; it will sure save you cost and time.
2. Scrutinize Your Debtors and Compile Detailed Information about Them
In the bid to sell off your delinquent debt to debt collection agencies, it is important that you scrutinize your debtors and then compile detailed information about them. If you have critically examined the debts you are owed and it is not worth suspending your life for to go after the debtors, then you should sell the debt off to a debt collection agency.
It is important to point out that before any debt collection agency buys any debt from you, you must present them with a detailed info of your debtors.
Info such as the name of the debtor, amount borrowed, interest accrued, the agreed that for debt payment, house address, office address, email address and phone number et al should be part of the info you will hand over to the debt collection agency.
3. List and Check up All the Debt Collection Agencies within Your Reach
If you have made up your mind to sell off your delinquent debt to a debt collection agency, the next step that you are expected to take is to list and check up all the debt collection agencies within your reach. You can visit the internet to gather the required info or you can check it out in your state’s yellow pages.
4. Make Your Choice of the Collection Agency to Use
Once you are able to critically examine all the debt collection agencies within your reach, the next step to take is to make your choice of the debt collection agency to sell your delinquent debts to. Part of what should guide you is their terms and conditions and also their mode of operations.
Some debt collection company would prefer to out rightly buy over the debt from you and pay you a portion of the debt you are owed and some debt collection agency would prefer to first help you collect the debt and then you will pay them some percentage of the debts they collect for you.
So, ensure that you chose the debt collection agency that is favorable to you. If you need the money baldy, then you should out rightly sell off the debt; the sharing formula might not favor you though.
5. Prepare a Comprehensive Documents / Report of Your Debtors
After making your choice of the debt collection agency to deal with, then you need to prepare a comprehensive documents / reports of your debtors. This document will contain all the info that will make it easier for the debt collection agency to carry out their task – collect the debt.
6. Read and Understand Their Terms and Conditions before Signing any Deal
It is important that you read and understand the terms and conditions of the debt collection agency you are dealing with before handing over the document / brief of your debtors to them. As a matter of fact, you should engage the services of your attorney before signing any contract with the debt collection agency that you intend selling your delinquent debt to. It is important to do so to avoid falling into a trap.
7. Handover the Details of Your Debtors to the Debt Collection Agency
If you are satisfied with the terms and conditions, then you need to handover the details (briefs) of your debtors to the debt collection agency.
If you asked folks who already used this medium to recover their debts how they felt after they were paid off, chances are that they would say that was the best decision ever to take. Therefore, it is important that you also make such a decision so as to recover your money fast.
Note: You should always protect your consumer information. Do not just share sensitive consumer information with anyone unless you already have an established relationship with them and reason for disclosing it is pertinent.
To avoid contacting the buyers whom you have sold their debts to a collection agency, it is advisable to remove their records from your debt list. Once you have sold the debt to the collection agency, you debtors will now owe the collection agency and not you again.