Incurring any financial liability, either in the form of a loan or bank loan, is also a voluntary submission to legal and financial liability for breach of the provisions of the agreement regarding timely repayment. The debt collection process is quite complicated and may take several stages, depending on how long the borrower will delay paying off the debt. Of course – the sooner he does it, the better and less expensive.
The loan repayment deadline has passed – what now?
Loan companies offer many opportunities to avoid problems related to defaulting on time. In the case of payday loans, some of them allow the loan repayment period to be extended or offer a refinancing service. However, such possibilities are only for the customer who has not yet exceeded the repayment deadline – it is impossible to use them after that deadline, even if we are ready to pay the appropriate fee. However, some of these companies allow the payday loan to be paid in installments if the limitation period has already expired. However, if the borrower has not taken any action, the loan company will start the debt recovery procedure.
Legal collection begins when the loan company sends the borrower a reminder of payment. Some companies do this immediately, some after a few days. Instead, they can do it in a variety of ways – by text, email, post or even by phone. Each institution has a specific pattern of writ proceedings, but it is assumed that letter form is the last resort.
At this stage, lenders usually still underestimate the activities of the loan institution and do not treat the prompts with due seriousness. This is a mistake, because such actions are also expensive (check how much it costs to fail to pay the loan in: “I am not paying back the loan – what additional costs I will incur”). Avoiding responses to reminders is also a guarantee that the company will pull heavier weapons to enforce loan repayment from the debtor.
Field activities are the stage of debt recovery, which debtors are much more afraid of. Usually, after two or three months of sending reminders, the loan company either transfers the case to a field debt collector or returns the debt to an external debt collection company. For the borrower, this usually means one thing – a visit to the debt collector at home.
Debt collectors have much more efficiency when it comes to enforcement actions, however, it is worth remembering that they are still conducting amicable debt collection, i.e. one that is intended to lead to a settlement. Usually, a debt collection company sends its employee with an already established repayment plan, in which a debt repayment system is developed, usually in monthly installments. Negotiations with the debt collector are acceptable, and even advisable, because they express a good will to repay the liability and give the company the chance to agree on more favorable repayment terms, wanting to resolve the matter and recover money as soon as possible.
Although avoiding meeting with the field debt collector is not the wisest move, you have to remember that there is no obligation to let him into the house, and the debt collector himself can only act within the limits prescribed by law – and these limits are quite narrow. The debt collector may not visit the debtor at the workplace, inform the employer or any other persons, not even the immediate family. Such situations are, in the opinion of some debt collectors, forcing the debtor to cooperate, however, they are unacceptable, and the debtor himself has the right to report such proceedings to the appropriate law enforcement authorities.
Debt enforcement by the state
Previous debt collection was private, i.e. one based on the principle of settlement, but the two sides of the dispute are assumed to be on an equal footing, so the debtor does not have to be afraid of any coercive measures. It looks different if the case goes to court. In order for the debt to be repaid, it must be referred to a court, where its legitimacy is confirmed. There is nothing to count on the fact that the court has dismissed claims against the debtor – this only happens if the debtor was cheated by a loan company. If this was not the case, most likely the court will order the payment of the debt, and in the event of failure to comply with the judgment, a bailiff will step in, who may seize the salary, property, movable and immovable property belonging to the debtor.
Agreements must be kept
Each financial liability is a limitation which the borrower has decided to make, and he must comply with it properly. A well thought-out decision to take out a loan will reduce the risk of these consequences, very often extremely severe. Debt collection in itself is not a pleasant process, and additionally exposes the borrower to further unpleasantness and costs, which, if accumulated, will significantly worsen his financial situation.