An individual or a business entity can access a loan from a lending institution and for some reasons fail to honor the repayment agreement. This can take a long time and turn into a bad debt. The efforts through which the money owed can be repaid is known as debt collection. This trend of defaulting payments has become common in Kenya. Consequently, collection agencies have also been established with the main goal of ensuring the debts have been collected on behalf of their clients. Normally, a commission is charged depending on given factors.
How exactly does the debt collection agencies work? Well, some opt to work as individuals while some are attorneys. Just in case you have a bad debt and you are worried of getting the nerve-wrecking call from the debt collector, then there are some facts you need to know. There is a way you can make the whole process less intimidating and stressful. The debt collection agencies normally embark on the responsibility of collecting the debts on behalf of the creditor who in turn pays them through a certain percentage from what they have collected. This is usually 20-45% depending on the prior arrangements. Among some of the debts they specialize include loans on are automobile loan debt, credit cards, student loans, business debt and unpaid phone bills. There are difficult cases in which the debt collectors can negotiate for a lesser amount from the debtors. In the case where the debtors have completely defaulted to make any payments, collectors can file a case against them.
Here in Kenya, the debt collection agencies are limited within the statute of limitations. It means there are conditions that have to be consideredbefore the collectors approach the debtor for the debt settlement negotiations. Through a phone call and mail, the collector will access the debtor and convince on the payment plans. In the case where the debtor is inaccessible, the use of private investigators or computer software systems becomes an option. The collector goes an extra mile of checking on the financial status of the debtor through searches in the bank profiles.However, the collector cannot access the bank account of the debtor even when all the details are within reach not unless a judgment is heard from the court. Normally, it still remains tricky for the creditor to get the payment even when a judgment has been made since the debtor can opt to put a lien on property, in some cases, the asset can be sold or a levy could be placed on the bank account in question.
Through the fair debt collection practices Act, the consumers are all protected from being harassed by the debt collectors. Normally the debt collector will communicate with the consumer to discuss and verify on the state of the debt at hand. The collector will then send a notice of the amount owed, the company as well as the payment plan, once this is done, the company and other credit bureaus will stop 'chasing' you since the debt has been disputed.