How many times have you seen that headline? How accurate is it? Is it even possible to have your debts collected free of charge?
We explore the rationale behind the claims.
- 1st is debt collection free?
- Well, maybe and maybe not!
The claim seems to be around collecting costs, compensation and interest from the debtor, which is all fine and well but, what if the debt collector / solicitor retains the compensation and interest? Is the debt collection still free?
Well we say no as if the compensation and interest is paid to you then it adds to your profit and therefore, if you don’t get the compensation and interest you no longer have that profit and it is therefore a cost!
It may not be a cost through your books but, it’s a cost, nonetheless.
- 2nd What if the debtor does not pay costs and compensation, interest etc? Well, I doubt if the debt collector / solicitor will just say, “Oh that’s fine, we told you it was free so it is and we won’t charge you” It’s more likely that if payment is made to them they will deduct fees before paying you.
So, maybe it’s not free after all!
The thing to remember is no one can guarantee to collect your debt far less to do so free of charge. Even if you get court judgments and start enforcement, there is no guarantee the debt will be paid.
So, the next time you ask someone to collect a debt and they advise that they will do so free of charge, ensure you read the small print in the T&C’s and / or drill down on exactly how they can promise to collect free of charge.
Not all collection companies are Open, Honest and Transparent and the ones who are will not have an issue with you questioning their fees.
It really is a bugbear of mines that others think that they are entitled to retain your compensation and your interest!
Remember, Due Diligence may just save you the requirement to have someone collect your debts in the first instance!
© JMS Credit Consultancy®