If the creditor has legitimately dunned the customer for the outstanding receivable, he may sell the receivable to a factoring company or remain the owner of the receivable and instruct a collection agency to collect the receivable on his behalf. While some send written reminders of the receivable, other collection agencies opt for collection letters and telephone collections. For a collection agency to be able to send collection letters or engage in telephone collections, they must register with the responsible registration authority.
A collection letter is to notify the debtor about the outstanding receivable, and a request for them to pay the amount shown immediately. This is the sum of the receivable owed to the creditor and the costs incurred by the involvement of the collection agency. Therefore the amount claimed in the collection letter is generally significantly higher than the original receivable. When receiving a debt collection letter, it is important to respond in a calm and level-headed manner.
First you should verify whether the claimed receivable exists, by checking your personal documents and records. Sometimes it is worth looking into the past, because a titled claim only expires after thirty years. If you cannot find what you are looking for, contact the collection agency and ask them to prove the receivable. Playing for time increases costs unnecessarily. If the debtor does not respond to the collection letter, or responds belatedly, a second letter from the collection agency may follow. This usually contains the suggestion to settle the outstanding amount in instalments.
If a debtor does not respond to collection letters and does not pay the existing claims in time, the collection agency may contact him again to motivate payment. If the debtor does not respond to collection letters, he must expect a legal dunning procedure to be initiated. Enclosed with the dunning letter is a form, for the debtor to comment on the claims. After receiving the collection letter, payments are payable only to the collection agency. The dunning process can only be stopped if the claim is settled before the specified deadline. This is the only way further consequences can be avoided. However, with the initiation of a collection procedure personal information may be shared with credit agencies. This can have a negative effect on the conclusion of contracts or borrowing in terms of the credit enquiry, thus the contract or credit could be denied. Anyone who has objections to the claims or feels the collection agency made a unjustified claim on him, should communicate this to the collection agency. Debtors who have lost track of their outstanding receivables or are unaware of any debt should call on a debtors' advisory office or a consumer advice centre without delay. Here the debtor will get professional assistance.