Collections and the Mediation Process

Collections Training Resource
March 15, 2013 — 1,051 views  
Become a Bronze Member for monthly eNewsletter, articles, and white papers.

Debt collectors are often employed by collection agencies which specialize in working with debtors, who had failed to repay their debts in time. Theses collectors help in achieving a repayment of an outstanding debt from these defaulting debtors. The collectors have to follow a series of steps in order to obtain the payment from these debtors in a legal manner.

Draft a Dunning Letter

Sending a dunning letter to the debtor is the first step to be followed by the collector, when he tries to obtain the outstanding payment from the debtor. This letter which is the initial form of contact is essentially a bill that contains the details of the money owned, whom the money should be paid to, when the payment should be made, the contact details of the collection agency, and details of the adverse notation which can happen to the debtor’s credit record if the repayment is not done on time. If you do not receive any response from the debtor after this mediation for collections, then you should move on with the other proceedings regarding the collection of the debt.

Follow-up Calls

If the debtor fails to make the payment after receiving the dunning letter, then the collector should try to establish contact by making phone calls. The debtor should be contacted on the phone number that is given in the files of the collection agency. If the professional, who is involved in the process of collection in mediation, is able to have a conversation with the debtor, then a time stamp should be placed on the call, so that future calls can be made at the same time.

The Other Collection Methods

If you are unable to make contacts with the debtor, then you should seek out other methods of collecting the debt. While doing mediation for collections, the professional should try to locate the debtor by contacting the acquaintances whose names are mentioned in the file. These details will be submitted by the debtor when he applies for the loan initially. You can also try contacting other collection agencies or search public records for details regarding the debtor. In this way the collection professional should try to track down the defaulting debtor and make a strong argument for him to repay the debt.

Legal Involvement

If the debtor fails to repay the outstanding amount, even after many attempts by the collection agency, then legal action should be initiated against him/her. The dispute should be taken to the attorney who will file a valid argument in a court of law. A positive ruling by the court will enable the collection agency to place a lien on the debtor’s property or will allow garnishing his/her wages until the entire refund of the amount is done.

Mediation outside the Court

Instead of taking matters to the court, you can also settle the money issues by the process of mediation outside the court. This process is also known as Alternate Dispute Resolution (ADR) and here, conflicts regarding money matters are settled without any legal action. The mediation in collection processes can be done with the help of a lawyer. A mediator negotiates matters in such a way so as to help both parties reach common grounds of dispute settlement. The meetings will be absolutely confidential and the conflict can be settled in a few days. Mediation process also saves you the time and expenditure which would have incurred if you had followed other processes.

Collections Training Resource