Debt collection

[rickyhyde89]

I have been working as a collector for Provident Personal Credit for a couple of months now and realised that I have been good at dealing with the awkward customer who try and avoid paying.

I thought of starting a debt collection agency but have been put off when I spoke to mates who have worked in the industry. They told me that the agencies they worked for bought a debt of say £10k for £8k. Obviously this is a big risk and I would need a huge budget to buy the debts. I thought that the agency would charge a set fee or percentage of the debt they collected.

Does anyone use a debt collection agency? How do they charge you? Would you be put off by an agency charging a fee to collect your debts rather than them buying them off you?

 

[OutsourceManager]

I have worked in debt collection previously and setting up a debt collection agency is relatively simple.

A lot of companies provide free web sites, where you select a background and add text regarding your business and contact details.

Then go onto Thomson Local, Yell etc and register free of charge for marketing.

The only fee is the licence for collecting debt approx £400.

If you are good at it and disciplined enough to chase following a set procedure then work on a no win, no fee basis - most companies do this, so no initial outlay for debt.

Go for it, if you can afford a few hundred initial outlay, very cheap start up business.

 

[rickyhyde89]

Anyone????

 

[AverageWhiteBloke]

You may have to be registered with some financial authority to be carrying out work. Like you already said it's a very difficult industry to work in. The law ultimately will go in the favour of the person that owes you money. If they have no money a court may decide to allow payments that they can afford. They might even be allowed to pay you off at £2 a week and halt any interest being accrued so your 2 grand profit might take forever to get in.

I have done work shopfitting for Provident before and had a good chat with the manager. Their business model appears more to be orientated towards high interest loans to people who can't go down the usual routes than buying bad debt. The debt collection side of things is more of a spin off from that.

 

[rickyhyde89]

You may have to be registered with some financial authority to be carrying out work. Like you already said it's a very difficult industry to work in. The law ultimately will go in the favour of the person that owes you money. If they have no money a court may decide to allow payments that they can afford. They might even be allowed to pay you off at £2 a week and halt any interest being accrued so your 2 grand profit might take forever to get in.

I have done work shopfitting for Provident before and had a good chat with the manager. Their business model appears more to be orientated towards high interest loans to people who can't go down the usual routes than buying bad debt. The debt collection side of things is more of a spin off from that.

Yes I would need a consumer credit licence if I want to work for any businesses which would cost £595, but I do not need one if I only want to take on work from LTD companies.

Yes people can get arrangements though the courts to pay back low amounts on a weekly/monthly basis but I would be looking to get my payment from my client once my job was comlplete. My fees would be much much lower than £2000.

I do not collect bad debt for provident, they pass that on to outside agencies once it reaches a certian level. I am an agent who sells loans and collects payments from customers. They do have high interest yes but the customers know this and everything is explained to them about the itnerest, weekly paments ect... so they know what they are signing up for.

 

[maxine]

You need a CCL if you are collecting any money from consumers or sole traders otherwise you can only act as debt collector for debts where the debtor is a limited company (regardless of whether your client is a limited company or sole trader).

If your experience so far is all consumer based then are you happy with your levels of experience with just pure B2B collections and recoveries?

Are you familiar with Commercial Credit Checks, Directors Reports, Tracing, Pre-Packs, and some of the limited company insolvency stuff?

If you want to set up as DCA for just B2B then it may be simpler and lower risk to operate on a no-collect-no-fee basis with fees of around 20-25% of the amounts recovered. Most businesses are put off by minimum fees as DCA's are unfortunately known for not collecting in line with clients expectations and still charging minimum fees. This is very easy to do. No qualifications, no license, just a phone and a diary should do

I wouldn't even consider going down the debt purchase route unless you feel that you have investigated things thoroughly. The toughest part is having the experience to know what value to put on book debt and how to assess that value of what to buy it for versus what you will realistically collect less your operating costs.

If you want to use your consumer collections skills and experience without the need for CCL then you can temp for other employers and offer your services that way operating as an employee under their name and license where appropriate.

 

[rickyhyde89]

You need a CCL if you are collecting any money from consumers or sole traders otherwise you can only act as debt collector for debts where the debtor is a limited company (regardless of whether your client is a limited company or sole trader).

If your experience so far is all consumer based then are you happy with your levels of experience with just pure B2B collections and recoveries?

Are you familiar with Commercial Credit Checks, Directors Reports, Tracing, Pre-Packs, and some of the limited company insolvency stuff?

If you want to set up as DCA for just B2B then it may be simpler and lower risk to operate on a no-collect-no-fee basis with fees of around 20-25% of the amounts recovered. Most businesses are put off by minimum fees as DCA's are unfortunately known for not collecting in line with clients expectations and still charging minimum fees. This is very easy to do. No qualifications, no license, just a phone and a diary should do

I wouldn't even consider going down the debt purchase route unless you feel that you have investigated things thoroughly. The toughest part is having the experience to know what value to put on book debt and how to assess that value of what to buy it for versus what you will realistically collect less your operating costs.

If you want to use your consumer collections skills and experience without the need for CCL then you can temp for other employers and offer your services that way operating as an employee under their name and license where appropriate.

I must of read it wrong on the website, I thought it ment the companies I was acting on behalf of needed to be LTD companies.

I was going to be targeting contacts collecting debts from the general public as I think this would be easier than collecting debts from businesses.

I was planning to work on a no-collect-no-fee basis as I have heard of lots of scams where collectors do nothing but still want paying. I would perfer to charge a small fee plus a percentage of the debt collected to at least cover my costs if I was unable to collect the debt but I know this would put people off so I am not going to.

I don't think I would ever buy debts. I know the profits are high but there are good reasons for that. The risk of not collecting the bedt would be a big loss for me as it would for most people and I would need to large amount of cash to start-up and buy debts.

 

[Steve Thornbury]

Good luck!

 

[mark power]

After over 20 years in Debt Recovery, doing all jobs within...I can categorically tell you a) you can NOT sell a debt and b) you can NOT buy a debt. The industry still does it which is astonishing, but the industry does many things which are unlawful. You can NOT place yourself as a 3rd party (after so-called 'buying' a debt(s) and anyone who tells you can are lying or indeed misguided...in any case many companies will sell you a debt(s) if your crazy enough to buy them, any debtor can simply say to you 'go away'. Furthermore, I bet you a pound to a pinch of salt, the debt(s) you 'buy' are likely to be statute barred in any case, that in itself means nothing...you can not in law recover a debt(s) which you now state you 'own' as you have 'bought it/them....this is not to get into the realms of 3rd party interloper, a munch debated subject, it is simply not robust in law and never will be. Yes, you can rely on foolish 'debtors' to pay you, but those days are rapidly disappearing...as I do believe are the days of a D.C.A. [only advice I can give honestly.......'enter another industry]

 

[Mr D]

After over 20 years in Debt Recovery, doing all jobs within...I can categorically tell you a) you can NOT sell a debt and b) you can NOT buy a debt. The industry still does it which is astonishing, but the industry does many things which are unlawful. You can NOT place yourself as a 3rd party (after so-called 'buying' a debt(s) and anyone who tells you can are lying or indeed misguided...in any case many companies will sell you a debt(s) if your crazy enough to buy them, any debtor can simply say to you 'go away'. Furthermore, I bet you a pound to a pinch of salt, the debt(s) you 'buy' are likely to be statute barred in any case, that in itself means nothing...you can not in law recover a debt(s) which you now state you 'own' as you have 'bought it/them....this is not to get into the realms of 3rd party interloper, a munch debated subject, it is simply not robust in law and never will be. Yes, you can rely on foolish 'debtors' to pay you, but those days are rapidly disappearing...as I do believe are the days of a D.C.A. [only advice I can give honestly.......'enter another industry]

Hopefully figured it out in last 6 years.