The various stages of debt collection from extrajudicial to judicial
When the debtor is reluctant to settle the debt
Debt recovery is the set of activities that companies, or banks, or financial companies have the possibility of carrying out towards a debtor, in order to try to “recover”, in fact, the sum that is due to them, when the debtor is reluctant to settle the debt.
A particular form is represented by the recovery of work credits (salaries or other sums not paid by employers) but in these cases different rules are followed.
Since, however, very often these creditor companies do not have time to carry out this type of activity after the payment reminder phase, they rely on companies specialized in debt collection, which are remunerated for each successful application or commission on results. Let’s see how debt collection works in Italy (with identical methodologies both in a large city like Rome, and in much smaller centers, and whether the creditor is a large bank like Unicredit or a small financial one that operates territorially).
The extrajudicial recovery phase
Debt recovery can consist of two phases: extrajudicial or judicial. The extrajudicial phase avoids legal proceedings (with consequent additional costs) and is preferred by companies that deal with debt collection when they can count on the collaboration of the debtor. Usually this phase is divided into specific steps.
First of all, a message is sent to the debtor via traditional mail and via e-mail explaining how much he has to pay, what the interest is and he is informed that the recovery of the credit has been entrusted to a specific company. Secondly, we move on to the telephone reminder, in which the operator will try to persuade the debtor to pay his debt.
If even this attempt does not work, then there will be agents who will take a direct view, through “physical contact”, of the real solvency situation of the debtor and will try to put down a real personalized repayment plan for the recovery of the credit. As a last attempt, in this phase, we proceed to the “formal notice”, after which we will enter the judicial phase.
The judicial phase
The judicial phase is usually reached only when everything possible has been attempted in the extrajudicial phase to convince the debtor to pay what he owes. However, when you get to court, the main purpose is to attach the assets owned by the debtor through a judicial act, but only after a sort of assessment to understand if the debtor is actually in possession of other assets and able to pay.
In fact, if the debtor is in possession of very few (and of little value) foreclosable assets, it is not convenient for the creditor company to go to the judicial phase, as it could pay the legal fees. The other roads are passable when the creditor is already in possession of an executive title to redeem the amount due, for example with promissory notes or checks that have been protested.