For a business, having a debt is frustrating, yet inevitable. When your customers or clients don’t pay you for the services you have rendered to them, you have four options to recover the money.
In this blog, we will look at these four options that can help you recover the outstanding amount.
Alternative dispute resolution
ADR or alternative dispute resolution settles a debt dispute between the debtor and creditor without involving the court. The process involves a mediator who presides over a meeting and helps both sides to resolve the issue with discussions.
It is becoming a popular option for many firms as it helps avoid going to court. The pros of using this option are:
1. It saves money and time
2. A mediator is neutral so both sides have the chance to produce their side of the story
3. It is a confidential process
4. It helps a business preserve its relationship with its clients or customers
The process
The process of ADR is simple. It starts with a mediator listening to each party separately. It helps the mediator decide if ADR will help solve their dispute or not. The process helps both parties come to the conclusion that they can work with.
Sending a demand letter
Another option is to work on your own to recover the outstanding amount. For that, you must start by sending a demand letter to the debtor. The letter has specific details about the dispute, like the debt amount, last date for paying the amount, and consequences of not paying the debt.
A creditor also sends a friendly reminder to the debtor like emails or calling the delinquent. When they don’t respond to either of these tactics, a creditor sends a demand letter to the debtor which informs about the seriousness of the lender involving a warning for a lawsuit.
Hiring a debt collection firm
If you don’t want to file a lawsuit just yet, another great option is hiring a third-party debt recovery agency like Cedar Financial. A debt collector works on commission to recover the outstanding amount, and only takes the commission if they recover the amount.
1. A collector is often more successful in recovering the debt as they have the experience and methods to deal with even the worst of the debtor.
2. They know every federal or state law, and they follow ethical codes while contacting a debtor for payment.
3. A collector usually starts by calling or emailing the debtor for payment.
4. Once they make contact, a debtor can validate the debt, during the validation process, the collector holds the collection process.
5. A collector can also help the debtor come up with a payment plan or help them negotiate the debt.
6. If the debtor doesn’t agree to pay, a collector can sue him with the creditor’s say so.
Filing a lawsuit
Your last option is to file a lawsuit against the debtor. A lawsuit is a time-consuming and expensive process. That is why it is best to keep it as a last resort. Make sure you all documents related to the dispute like the demand letter, and so on.
If you win the lawsuit, you can ask for wage garnishment or seize the assets of the debtor.
What option do you think is the best for your business? Let us know in the comments below.
In this blog, we will look at these four options that can help you recover the outstanding amount.
Alternative dispute resolution
ADR or alternative dispute resolution settles a debt dispute between the debtor and creditor without involving the court. The process involves a mediator who presides over a meeting and helps both sides to resolve the issue with discussions.
It is becoming a popular option for many firms as it helps avoid going to court. The pros of using this option are:
1. It saves money and time
2. A mediator is neutral so both sides have the chance to produce their side of the story
3. It is a confidential process
4. It helps a business preserve its relationship with its clients or customers
The process
The process of ADR is simple. It starts with a mediator listening to each party separately. It helps the mediator decide if ADR will help solve their dispute or not. The process helps both parties come to the conclusion that they can work with.
Sending a demand letter
Another option is to work on your own to recover the outstanding amount. For that, you must start by sending a demand letter to the debtor. The letter has specific details about the dispute, like the debt amount, last date for paying the amount, and consequences of not paying the debt.
A creditor also sends a friendly reminder to the debtor like emails or calling the delinquent. When they don’t respond to either of these tactics, a creditor sends a demand letter to the debtor which informs about the seriousness of the lender involving a warning for a lawsuit.
Hiring a debt collection firm
If you don’t want to file a lawsuit just yet, another great option is hiring a third-party debt recovery agency like Cedar Financial. A debt collector works on commission to recover the outstanding amount, and only takes the commission if they recover the amount.
1. A collector is often more successful in recovering the debt as they have the experience and methods to deal with even the worst of the debtor.
2. They know every federal or state law, and they follow ethical codes while contacting a debtor for payment.
3. A collector usually starts by calling or emailing the debtor for payment.
4. Once they make contact, a debtor can validate the debt, during the validation process, the collector holds the collection process.
5. A collector can also help the debtor come up with a payment plan or help them negotiate the debt.
6. If the debtor doesn’t agree to pay, a collector can sue him with the creditor’s say so.
Filing a lawsuit
Your last option is to file a lawsuit against the debtor. A lawsuit is a time-consuming and expensive process. That is why it is best to keep it as a last resort. Make sure you all documents related to the dispute like the demand letter, and so on.
If you win the lawsuit, you can ask for wage garnishment or seize the assets of the debtor.
What option do you think is the best for your business? Let us know in the comments below.
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