Understanding the difference between Debt recovery and debt Collection

Posted by Christian Silmaro on January 30th, 2018

When a person takes a loan from a particular company or plan ahead to get the huge payment but don’t repay it on time, then bank has to take some action to grab the amount back along with the interest. This process is called as debt collection. Debt collection is further divided into soft bucket and hard bucket. Under the soft bucket, the recovery of unsecured amount is done. It is also opted by the businesses for which they hire the third party in the form of soft collectors who ensure that debt is collected in the right manner.

Understanding the concept of debt collector:

When the collection of debt is giving to the third party or it is outsourced, the term is called as the bucket. The collection of debt method entirely depends on the payment history associated with the debt or debtor. Under the hard bucket option, the secured payment needs to be recovered. Of course, both the types require the right party who can take the job seriously and ensure that the payment is done on time and in a right manner. That is why; if you are taking a loan or thinking of debt collector option, make sure you are pretty much aware about it.

Difference between debt collection and debt recovery:

Often people get confused between the concepts of debt recovery and debt collection. Ideally these two are completely different concepts. The debt collection totally consists of soft bucket collection Oman and hard bucket collection.  Debt collection initiates if a person fails to make the payment on the loan which he has taken on credit card. If the debtor fails to make the payment within 30 days, then it reported to the credit bureaus for which the debt collection process is then initiated. Of course there is a proper process that one needs to follow for the same.

The debt recovery is however, altogether a different concept. It takes place when a person takes the loan such as credit card balance and it does not get paid on time. A credit then hires the third part which is also known as the collection service. It is important to since it is directly related to the credit score. If you are contacted by any means by such person, it means that you haven’t paid certain kind of debt and it is high time for you to actually clear it off as soon as possible.