Debt Collection and Insolvency are two terms we see mentioned in the same breath regularly. But should good money be routinely thrown after bad?
Quite often we see creditors instructing Debt Collection Agencies, especially one particularly inquisitive and assertive one, where their customer has already entered into Liquidation or Administration. Sometimes this will be long after the debt fell due and after submitting a claim to us as the appointed Insolvency Practitioner.
Instruction to some Debt Collection Agencies after the event of Insolvency can incur additional unnecessary costs for the creditor. But this need not be the case.
A much better approach would be to contact the insolvency practitioner's firm and ensure they are listed as a creditor and their claim logged. Any concerns about the conduct of the insolvent customer should also be raised as the IP will usually have a duty to investigate. Alternatively, and if you feel you are not getting adequate responses from the IP, we may be able to assist. In some cases, and with enough creditor support, we may be able to be appointed in respect of the Insolvency and investigate for you.
I am not saying that all Debt Collection Agencies are bad or that you should not instruct them. On the contrary, they can be of great benefit in the right circumstances. Indeed there are one or two that we use ourselves to collect book debts on our behalf.
The correct time to instruct a Debt Collection Agency is soon after your invoice terms have elapsed rather than once your client is in Administration or Liquidation. The Debt Collection Agencies we use are well versed in the Insolvency process and operate by charging a percentage of money recovered. These Debt Collection Agencies are specialists in their field and operate in the interests of creditors; we have seen them provide value for money support to many different creditors over the years.
If you feel the need to instruct a Debt Collection Agency please do let me know and I can point you in the right direction.