Ethical Debt Recovery: What Collections Agents Should Avoid

Debt recovery is an essential part of the BNPL (Buy Now Pay Later) and consumer lending process. When a customer fails to pay back their loans, it can cause financial losses for the lender. However, it is crucial for the collections or debt recovery agent to act ethically and professionally during the debt recovery process.

Here are some improper situations that a collections or debt recovery agent should avoid when dealing with BNPL and consumer lending:

1. Avoiding Insults and Improper Questioning

It is not acceptable for a collections or debt recovery agent to insult or question the debtor in an improper manner.

Using abusive language, calling the debtor a liar or a shameless person, or questioning their intelligence can cause distress and make it difficult for the debtor to cooperate. Instead, the agent should remain calm, respectful, and professional, and avoid making any derogatory or insulting comments.

2. Don't Force Family Members to Pay Debts

Debt collection agents should not involve the debtor's family members or use their relationship with the debtor to force them to repay the debt.

Asking questions like "Are you a good parent to allow your children to have bad debt?" or "You don't care about your children and their debt?" is not only inappropriate but also irrelevant to the debt recovery process.

The agent should focus on communicating with the debtor directly and avoid involving their family members.

3. Why Using Threats can Break Recovery

Using threatening language like "You will be in jail!" or "We will call the police!" can be intimidating and cause unnecessary stress to the debtor.

Debt collection agents should not use threats to collect debts as it is illegal and unethical. Instead, they should use legal means to recover the debt.

4. Steer Clear of Home Collection Threats

Warning the debtor of home collection can also be considered an improper situation.

Threatening to send collectors to their home or workplace can be intimidating and cause distress to the debtor.

It is important for the agent to follow the legal process and avoid making any false claims or threats that may be illegal.

5. Don't Break the Rules and Internal Policies

Debt collection agents should follow the internal process of their organization while collecting debts. Any warning that is not aligned with the organization's internal process may not be ethical or legal.

It is important for the agent to understand the internal process of their organization and follow it strictly.

6. Avoid Missteps When Contacting Authorities

Debt collection agents sometimes use the help of the municipality or police station to track down the debtor.

However, it is important for them to follow proper communication protocols and avoid being rude or pushy. They should also not call too often or involve the authorities unnecessarily.

Professionalism is the Key to Debt Recovery

Debt recovery is an essential process that should be done ethically and professionally. Collections or debt recovery agents must avoid engaging in improper behavior such as insults, improper questioning, threatening language, involving family members, and unnecessary warnings.

It is crucial to follow legal means and internal processes while collecting debts to ensure a positive outcome for both the lender and the borrower.

By avoiding these improper situations, collections or debt recovery agents can build a better reputation and help to create a more positive environment for the debt recovery process.