What are collection agencies good for?

If someone wants me to pay money, it's logical that I don't like him and do not want to communicate with him. This is a basic human attitude and believe us, our operators could really tell about it ...

The collection agency makes a living by providing the creditors with a refund of the funds that the people have borrowed. Usually, those of who borrowed the money and did not return it are significantly less than of those who repay it properly. The number varies, depending on the product, somewhere between 5% - 20%.

Collection agencies help not only creditors and 80% of clients who repay properly, but also the remaining 20% ​​who do not repay properly. How?

As for the lender, it goes without saying. The creditor has lent the funds and wants them back. He doesn't want to focus on collecting the debts because it's not his business. Therefore, he turns to a collection agency to cooperate with. Afterwards, he invests the recovered funds in the development of his own business, e.g. providing of loans or mortgages to other clients.

But how do debt collection agencies help clients who repay properly? The financial health of banks as well as other non-banking institutions is very important. Banks have only a certain amount of finance that they can use to provide loans. If they have too many non-performing loans, their ability to provide additional loans is at stake. Also, if the overall situation on the financial market is bad, interest rates increase, which is disadvantageous for all clients. By timely help to the clients in arrears, debt collection agencies help maintain the market balance, thus contributing to the stabilization or decline of interest rates, and also contribute to sufficient funding for lending.

So what about the third group? Clients who do not pay? Here, too, collection agencies have a positive role to play. Debt collection proceedings do not cost the debtor anything extra, unlike court proceedings. The creditor could put his client, who does not repay in time, in court and his debt would multiply. However, the creditor prefers to invest in a debt collection procedure, in which the debt collection agencies try to find and contact the debtor – by all possible means of communication, and try to help him find a way to pay his debt.