Commercial Debt Collection: How It Works

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Commercial debt is any money owed by a business or commercial venture. You can use the funds to improve the organization, fund expenses, and acquire assets. Many companies can accumulate commercial debt, especially when they start a business. In that regard, Commercial Debt Collection is when an agency collects the payment on behalf of the creditor. As the debtor, you will agree on how to pay back the money.

How Does It Work?

First, the creditor will reach out to the debtor requesting them to pay the outstanding debt. The business should honor the payment within 90 to 120 days. When that time elapses, the creditor will have three options to get the money back. The possibilities are to sue, assign, or sell the debt to a collection agency. The commercial debt collection agency that buys the debt has the obligation of tracking down the company.

The agency will ensure that the organization pays the money since it has taken over the debt. It will contact the debtor via email or phone to discuss the payment plans and conditions. The agency will also give the timeline to repay the dues as per an agreement. Businesses that fail to pay within the stipulated period face a lawsuit.

Usually, debt collection agencies are supposed to abide by the laws not to harass debtors. The Fair Debt Collection Practices Act (FDCPA) protects businesses from such mistreatment. During negotiations, debtors need to get an experienced attorney. The expert will help them get a reduced payment amount. This way, the collection agency won’t ask you to pay the full sum of debt.