Before we try to understand how to deal with our debtors, let us see what debt is all about and how we can avoid being in this situation in the first place.
What is debt
Debt (in the financial context) means any amount of money that is either owed and/or due. In a financial contract, the parties to any debt are referred to as ‘lenders’ i.e. those who actually give the amount of money and ‘borrowers’ are the people who take the money loaned by the lenders. A typical financial contract that involves borrowing any sum of money, generally envisages a return of the full amount (principal) at a later date along with a certain amount (interest) that is over and above the original figure that was borrowed. The borrower usually has to pay both the principal and the interest in staggered payments called ‘instalments’.
The trouble arises only when the borrower is not able to not meet his regular minimum instalment payments. This usually happens when the borrower is not able to earn an amount sufficient to make those payments while trying to earn a living for himself as well as his loved ones.
How to deal with debtors
However, there are many cases where the individual concerned is not paying even though he is ostensibly well-off. Under these circumstances there are various ways to deal with this problem.
What ‘not’ to do
Many provinces in Canada have laws that do not allow debt collection firms to harass their debtors. As a general rule, credit collection agents are not allowed to call on people between the hours of 9 pm and 7 am in many parts of the country. Also Sundays and statutory holidays are considered partially prohibited days in most provinces in Canada. Calling people or banging on their doors at 3 am is not a good idea (as many collection agents have found to their detriment after they were reported for harassment)
The law in Ontario province states that collection agents are not allowed to email, or speak with a debtor or even send him or her voice messages, more than three times in a seven day period after the first conversation. Collection agents are allowed only one means of communication and that is ‘regular’ mail.
What you can do to recover your loan
Any debt given to an individual is an investment and just because a debtor is not paying you does not mean it is a ‘sunk cost.’ This is what you can do to recover your hard earned money.
o Focus on the problem at hand
The borrower (debtor) might try to distract you with a barrage of personal tragedy stories as well as excuses till you completely lose the original point that you were trying to make. This is why you must not allow yourself to be distracted and make sure the discussion hovers around only one point, “How soon can you expect your payments to be cleared?”
o Be thoroughly professional irrespective of provocation
The sundry debtor just might try to make you lose your temper. Under no account should you do that and must not raise your voice or try and strike the debtor. If you indulge in physical and or verbal abuse, you might end up being hauled up on criminal charges. That is why it is imperative that your demeanour must be completely professional at all times.