Debt recovery. Is it worth following the "I’ll do it myself" principle?



In cases of having debtors, executives are intimidated not only by a possible disruption of the creditor's company, but also by another type of headache – the necessity to make a decision whether to recover the debt from their own resources or to seek professional help

In these times of global optimisation, it is quite difficult to imagine a company manager undergoing the process or hiring a permanent dedicated team (except for the cases of ultra-large companies).

However, if the debt recoverers are viewed with skepticism and it is eventually decided to recover debts without the help from external sources, various and rather complicated procedures await, says Vytautas Januška, Project Manager at eskolos. According to him, the following are the things that professionals would be able to do faster and cheaper compared to companies.


Contacts are often outdated

Part of the debts are recovered in the pre-trial debt recovery process. During this process, the creditor itself can be an active participant.

The essential purpose of the pre-trial debt recovery process is to contact the debtor and arrange for it to settle the debt. Unfortunately, the contacts of debtors often change, and companies are rarely engaged in their constant renewal, therefore, the opportunities to reach the desired debtor may eventually hit a brick wall, says Januška.

Debt recovery companies use the services of registries and are able to get the latest debtor data in such a way. These measures are rarely available to the creditors. Therefore, this saves the company's resources, while the debtor usually takes the debt recoverers more seriously compared to the company's specialist.

If an agreement is reached, the debt recoverer will also complete the further formalities: sign the contract, approve it, thus saving both time and money that may have to be spent on litigation later, if this stage does not go through smoothly.


Jungle of procedural documents

It is certainly not always possible for the parties to reach an agreement in good faith and this eventually leads to involvement in legal proceedings. The court is always approached with an appropriate procedural document, namely a claim, which the court may not accept due to improper form or insufficient content.

"This is not just an empty requirement," Januška says. “A properly drafted procedural document ensures that everything the court needs to make a decision is provided, and also facilitates the processing of information by court staff. Knowing the workload of the courts, professionals try not to make life more difficult for them by not submitting poorly prepared documents."

Without a debt recovery partner, specific procedural documents would have to prepared by yourself or you would have to contact lawyers, who often charge an hourly fee for their services. After making multiple calls and spending several hours to prepare a lawsuit will drain your budget for debt recovery.

In comparison, debt recovery specialists provide a "package" of all necessary services: they prepare procedural documents and represent the client's interests in court proceedings, no matter how long it takes. In addition, these services are usually provided by professionals for a so-called success fee, so they are directly interested in the client's result.

It takes quite a long time for the courts to deal with cases, notes Januška. Therefore the choice of a professional team and service package is simply more economical. Finally, debt recoverers specialise in this area and are therefore able to act very quickly and purposefully.


It is difficult to recover a debt abroad

Questions also arise when the debt has already been awarded by a court and the client is in possession of an enforcement order. A person or a company may hand over the document to the bailiffs' offices by themselves or, once again, contact professional debt recoverers, so that they could not only carry out the work of submitting the document, but also take a thorough interest in the whole process and ensure that the bailiff does not slow things down.

In addition, a number of debt recovery actions are currently taking place abroad. This part of debt recovery would cause inconvenience to a large number of companies operating in Lithuania, because bailiffs do not perform forced debt recovery abroad – companies with a recovery order would not be able to do anything with it. On the other hand, debt recoverers usually have partners around the world, Januška notes.

Sometimes it is worth making a comparison of which option is cheaper for the client: a debt recovery partner, the company's internal debt recovery team or the services of a lawyer? According to Januška, in the economic sense, the services of debt recovery professionals are unequivocally most effective. The essential difference is the method of calculating the remuneration. The company’s team needs to be maintained on an ongoing basis, and lawyers, as mentioned above, rarely go into negotiations concerning a success fee – usually they charge an hourly rate. At that time, debt recoverers basically take the risk that if the debt is never recovered, they will have worked free of charge for many hours, but most importantly, the process itself will cost the customer nothing.


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