CAN DEBT COLLECTION BE FREE OF CHARGE?

“How much will it cost me?” This is probably one of the first questions you will ask yourself when considering collecting your unpaid bills. There are many “free” debt collection offers on the market. But if it’s free, how do these providers get paid?

 

Why does a lettuce cost 0.99 € at Lidl?

 

The price of a lettuce at Lidl is different from the price at Delhaize or Colruyt. But nowhere is it free. Its price depends on several factors including the quality of the lettuce itself. Likewise, in the debt collection market there are different offers. The question is therefore which collection partner will make the difference for you. How do you choose the right supplier, the one who not only invests in promoting its services, but also delivers results? What elements should you consider when choosing your collection agency, your lawyer or your bailiff as a partner in the process of recovering bad debts?

 

 

What the law says

 

This activity is highly regulated! For example, the letter to your consumer debtor is subject to a number of legal requirements (such as the name of the creditor, his telephone number and his business number), and (in B2C cases) the debtor can no longer be contacted within the first 15 days following the sending of this letter.

In addition, the operating costs or the recovery costs of amicable efforts cannot legally be invoiced to the consumer. So, what can we recover? Costs and interest in accordance with the general conditions of the seller or the law.

 

  • Moreover, a no-cure-no-charge rate can only be offered by collection agencies or bailiffs acting out of their official duties. Attorneys or bailiffs acting within the framework of their official functions cannot work with no-cure-no-charge.

o Attorneys at law or bailiffs should not be paid on a percentage basis, only because otherwise a large creditor could flood debtors, real or suspected, with legal action at no cost. Consequently, these debtors would have to bear the costs of their defense. And the taxpayer would have to bear the costs of an even more congested justice.

o The bailiff’s fees cannot be determined freely, but are fixed by law.

 

  • When bailiffs or attorneys are hired as amicable intermediaries, it must be very clear to the debtor that they are acting in their amicable and non-judicial framework.

o Testaankoop, a consumer protection organisation, is concerned about bailiffs acting in the context of the amicable procedure: “The letterhead, the signature, the language used, and the status of these professions create a lot of confusion among consumers as to their rights and obligations. The status of bailiff gives them a position of power, preventing consumers from making an informed decision”. (translated)

 

  • A final important point in this regard: collection agencies must be registered with the FPS Economy, which is also the supervisory body for the collection sector. So, check if your collection partner is registered.

o A recently tabled bill also aims to compel bailiffs who engage in amicable collection to register with the FPS Economy.

o In the same article, Testaankoop writes: “The problems and abuses of amicable debt collection are more and more among the bailiffs. Testaankoop therefore considers that the preferential treatment of judicial officers should be abolished and that they should also fall under the control and sanctions of the FPS Economy. Anyone who collects amicable debt must respect the rules and they apply, without distinction, to everyone! ” (translated)

 

What is the effect of your choice of collection partner?

 

The actions of a debt collection office influences your debtor as well as those of a lawyer or a bailiff. How do they differ?

  • If you want to maintain a customer (commercial) relationship with the debtor, it is better to opt for a truly amicable approach.

o Many lawyers also use TCM’s services to collect their unpaid invoices amicably.

 

  • If you have reached the end of the amicable procedure and you do not see a way out of this approach, you can opt for the additional services of a lawyer or a bailiff.

o Many collection agencies work with lawyers and bailiffs when the judicial phase is reached. At TCM, less than 1% of claims end up in court.

 

What is the actual cost of your choice?

 

In commerce, there is no such thing as free lunch. But prices are variable. Benefits too.

  • “Online collection” platforms have flourished in recent years. They offer a generally very simple and inexpensive system.

o As explained above, it is illegal in Belgium to collect collection or operating costs from the consumer. For B2B, this is not strictly illegal, but it is illusory. So, check carefully what the proposed service consists of: is it an amicable collection or a direct and immediate legal procedure? Is it limited to B2B?

o If it is not an amicable provision of services, but one of the legal proceedings, it may indeed be possible to claim certain costs from the debtor. Expeditious court proceedings (such as the procedure for uncontested claims) only work when there is no dispute. If there is a dispute, which is relatively frequent in these proceedings, the debtor will not pay but you will receive an invoice for costs, at legal rates but relatively steep, for a nil result.

 

  • Most collection agencies offer a no-cure-no-charge service. Hence, there is no risk for the creditor to pay for something that does not work. And the cost is fixed, agreed and therefore predictable. The only risk is the loss of time if a case is not resolved in the amicable phase. But in fact, direct court proceedings usually do not save time. The amicable phase is on the other hand an asset for a possible judicial phase.

o Some collection agencies require subscription fees, or a minimum volume requirement, or exclusivity. So, make sure you always know what you’re really getting.

 

Quality and content of the service

 

Not only the cost, but also the quality of the collection service varies. For some organizations, only price seems to matter (e.g. government in public procurements), but there are other criteria that should definitely be considered as well:

  • Check if the collection partner has good references from a variety of clients.
  • How does the collection partner work?

o The intention is to do more than what has already happened during the internal collection phase of the creditor himself.

o Does the collection partner have additional services such as a team of employees who do home visits, under employee code of conduct?

o Does the collection partner adhere to Belgian legislation (and in particular on privacy) concerning the sector and does it operate in an ethical manner? The purpose is of course to maintain the customer relationship through a truly amicable collection.

o Is the collection partner affiliated to a renowned international network if you have any foreign debts to collect? Local partners are familiar with regional legislation and customs.

o Is the collection partner voluntarily affiliated with (monitoring) bodies such as ABR-BVI?

o Is the collection partner easy to contact and does he / she keep you well informed about your cases?

 

  • Digitization has become an indispensable part of the functioning of the debt collection industry. However, it is the people who make the ultimate difference and algorithms cannot replace their work.

o Computerization must support employees in their work. These are the people who ensure a more efficient and often even more transparent operation. But digitization also allows customers to consult their receivables anywhere, 24 hours a day. This transparency is a guarantee of proper functioning.

o Some collection partners provide administrative relief to creditors by automatically transferring debts from one system to another (API connections).

 

Conclusion

The highest cost of collection will ultimately remain when you don’t get paid. We hope the above explanation will help you choose a reliable partner to collect your unpaid invoices in a professional manner.

 

Questions ? Do not hesitate to contact us!

CAN DEBT COLLECTION BE FREE OF CHARGE?

“How much will it cost me?” This is probably one of the first questions you will ask yourself when considering collecting your unpaid bills. There are many “free” debt collection offers on the market. But if it’s free, how do these providers get paid?

 

Why does a lettuce cost 0.99 € at Lidl?

 

The price of a lettuce at Lidl is different from the price at Delhaize or Colruyt. But nowhere is it free. Its price depends on several factors including the quality of the lettuce itself. Likewise, in the debt collection market there are different offers. The question is therefore which collection partner will make the difference for you. How do you choose the right supplier, the one who not only invests in promoting its services, but also delivers results? What elements should you consider when choosing your collection agency, your lawyer or your bailiff as a partner in the process of recovering bad debts?

 

 

What the law says

 

This activity is highly regulated! For example, the letter to your consumer debtor is subject to a number of legal requirements (such as the name of the creditor, his telephone number and his business number), and (in B2C cases) the debtor can no longer be contacted within the first 15 days following the sending of this letter.

In addition, the operating costs or the recovery costs of amicable efforts cannot legally be invoiced to the consumer. So, what can we recover? Costs and interest in accordance with the general conditions of the seller or the law.

 

  • Moreover, a no-cure-no-charge rate can only be offered by collection agencies or bailiffs acting out of their official duties. Attorneys or bailiffs acting within the framework of their official functions cannot work with no-cure-no-charge.

o Attorneys at law or bailiffs should not be paid on a percentage basis, only because otherwise a large creditor could flood debtors, real or suspected, with legal action at no cost. Consequently, these debtors would have to bear the costs of their defense. And the taxpayer would have to bear the costs of an even more congested justice.

o The bailiff’s fees cannot be determined freely, but are fixed by law.

 

  • When bailiffs or attorneys are hired as amicable intermediaries, it must be very clear to the debtor that they are acting in their amicable and non-judicial framework.

o Testaankoop, a consumer protection organisation, is concerned about bailiffs acting in the context of the amicable procedure: “The letterhead, the signature, the language used, and the status of these professions create a lot of confusion among consumers as to their rights and obligations. The status of bailiff gives them a position of power, preventing consumers from making an informed decision”. (translated)

 

  • A final important point in this regard: collection agencies must be registered with the FPS Economy, which is also the supervisory body for the collection sector. So, check if your collection partner is registered.

o A recently tabled bill also aims to compel bailiffs who engage in amicable collection to register with the FPS Economy.

o In the same article, Testaankoop writes: “The problems and abuses of amicable debt collection are more and more among the bailiffs. Testaankoop therefore considers that the preferential treatment of judicial officers should be abolished and that they should also fall under the control and sanctions of the FPS Economy. Anyone who collects amicable debt must respect the rules and they apply, without distinction, to everyone! ” (translated)

 

What is the effect of your choice of collection partner?

 

The actions of a debt collection office influences your debtor as well as those of a lawyer or a bailiff. How do they differ?

  • If you want to maintain a customer (commercial) relationship with the debtor, it is better to opt for a truly amicable approach.

o Many lawyers also use TCM’s services to collect their unpaid invoices amicably.

 

  • If you have reached the end of the amicable procedure and you do not see a way out of this approach, you can opt for the additional services of a lawyer or a bailiff.

o Many collection agencies work with lawyers and bailiffs when the judicial phase is reached. At TCM, less than 1% of claims end up in court.

 

What is the actual cost of your choice?

 

In commerce, there is no such thing as free lunch. But prices are variable. Benefits too.

  • “Online collection” platforms have flourished in recent years. They offer a generally very simple and inexpensive system.

o As explained above, it is illegal in Belgium to collect collection or operating costs from the consumer. For B2B, this is not strictly illegal, but it is illusory. So, check carefully what the proposed service consists of: is it an amicable collection or a direct and immediate legal procedure? Is it limited to B2B?

o If it is not an amicable provision of services, but one of the legal proceedings, it may indeed be possible to claim certain costs from the debtor. Expeditious court proceedings (such as the procedure for uncontested claims) only work when there is no dispute. If there is a dispute, which is relatively frequent in these proceedings, the debtor will not pay but you will receive an invoice for costs, at legal rates but relatively steep, for a nil result.

 

  • Most collection agencies offer a no-cure-no-charge service. Hence, there is no risk for the creditor to pay for something that does not work. And the cost is fixed, agreed and therefore predictable. The only risk is the loss of time if a case is not resolved in the amicable phase. But in fact, direct court proceedings usually do not save time. The amicable phase is on the other hand an asset for a possible judicial phase.

o Some collection agencies require subscription fees, or a minimum volume requirement, or exclusivity. So, make sure you always know what you’re really getting.

 

Quality and content of the service

 

Not only the cost, but also the quality of the collection service varies. For some organizations, only price seems to matter (e.g. government in public procurements), but there are other criteria that should definitely be considered as well:

  • Check if the collection partner has good references from a variety of clients.
  • How does the collection partner work?

o The intention is to do more than what has already happened during the internal collection phase of the creditor himself.

o Does the collection partner have additional services such as a team of employees who do home visits, under employee code of conduct?

o Does the collection partner adhere to Belgian legislation (and in particular on privacy) concerning the sector and does it operate in an ethical manner? The purpose is of course to maintain the customer relationship through a truly amicable collection.

o Is the collection partner affiliated to a renowned international network if you have any foreign debts to collect? Local partners are familiar with regional legislation and customs.

o Is the collection partner voluntarily affiliated with (monitoring) bodies such as ABR-BVI?

o Is the collection partner easy to contact and does he / she keep you well informed about your cases?

 

  • Digitization has become an indispensable part of the functioning of the debt collection industry. However, it is the people who make the ultimate difference and algorithms cannot replace their work.

o Computerization must support employees in their work. These are the people who ensure a more efficient and often even more transparent operation. But digitization also allows customers to consult their receivables anywhere, 24 hours a day. This transparency is a guarantee of proper functioning.

o Some collection partners provide administrative relief to creditors by automatically transferring debts from one system to another (API connections).

 

Conclusion

The highest cost of collection will ultimately remain when you don’t get paid. We hope the above explanation will help you choose a reliable partner to collect your unpaid invoices in a professional manner.

 

Questions ? Do not hesitate to contact us!

Don’t wait another second – collect your money

Focus on your business, we’ll take care of your outstanding payments. Contact us to find out more.

Don’t wait another second – collect your money

Focus on your business, we’ll take care of your outstanding payments. Contact us to find out more.