What are Collection Costs: Paul Mackenzie Debt Consultancy
Posted by Paul on January 28th, 2016
Paul Mackenzie Debt Consultancy, we specialize in debt collection at very low and affordable fees. Our collection fee is based on several factors which this article will discuss. We also clarify on what collection cost are and what the role that the debtor and creditor plays with regard to collection costs.
A collection cost is defined as any cost that is related to the recovery of debt where a debtor has defaulted in payment. Items such as the fees that attorneys and agencies charge are examples of collection costs. Other examples include the different costs that are involved in the legal process of collecting debt.
When an individual or entity borrows money, applies for a line of credit, or finances a purchase, an agreement is normally signed stating repayment terms on interest. Most of these kinds of agreements have provisions for default and outline the steps that the creditor can take in the instance the debtor fails to make payments for the debt as per the terms of agreement. The provision for default normally contains a clause providing the borrower to make payments for any costs incurred for the collection — that is, the debtor is expected to make payments for all costs that are incurred in process of collecting the unpaid debt.
As long as an individual who has borrowed money makes on time payment on the minimum amount that is due, the loan is termed as being on good standing. It therefore takes some considerable time prior to a creditor declaring default on a loan. If a debtor skips two payments consecutively, most creditors will immediately declare a default on the loan and set off the process of collection.
When lenders contract our services at Paul Mackenzie to collect a debt that is defaulted, we keep track of all costs we incur in the process of debt collecting. The cost of posting mail for a collection is an example of such collection cost, as well as telephone costs to the borrower. The Paul Mackenzie portfolio is such that we have a percentage fee charged on the debt collected as opposed to itemizing the expenses.
Another collection cost that is included is the attorney’s fees. Where we are unsuccessful in debt collecting, the original lender refers the case to a lawyer, who continues with the collection efforts, informing the borrower of the possibility of a lawsuit if he or she refuses to pay. The lawyer has the right to make negotiations with the debtor with the amount being negotiated as the total owed to the lender including collection costs and attorney’s fees. If the case is forwarded to the court, there is very little likelihood of the amount being adjusted and the debtor is ordered to pay the full amount when the lender wins the case.
About the AuthorPaul
Joined: December 1st, 2015
Articles Posted: 5
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