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Bad debt recovery refers to the different loans and delinquent payments that are derived from past due consumer and commercial debt. These debts are usually connected to a loss when written of by the creditors. Logically debt recovery is a good thing and one may come across instances where they will have to use collection agency to recover any possible loss of revenue from borrowers.

Executing bad debt recovery is sometimes a tricky situation. It can be carried out using first party or third party collection agencies. Sometimes the use of debt buyers becomes necessary to overcome any possible loss. First party debt recovery is most times done by the company and or its subdivision and internal finance departments. That is the original lender gets to contact and request repayment of loans or debts. Third party debt collection is done by the set of private debt recovery systems or companies; who only handle debt recovery as a business.

Bad debt recovery involves payments to collection agencies, bailiff services, debt recovery solicitors and attorneys, court actions among other services. Interest fees from creditors are usually necessary to cover any possible losses. It usually depends on the companies’ policies. In some countries like the UK and Netherlands they can only charge eight percent (8%) on the total debt amount (, 2017).

Collection of debt procedures that I would employ would most be centered on refinancing and flexible payment options. It may include tracing and monitoring services that will involve verbal communication such as friendly reminders in emails, phone calls, fax messages and maybe voicemail messages. If unsuccessful I would consider pre-legal steps to firstly have clients come in and have are financing of debts done so as to work out a easier and more feasible payment plan for the client, which will in turn be beneficial to the institution.

All else fails then legal steps may need to be taken to have the monies collected. This may involve getting the courts involved. Payment agencies will be employed along with attorneys to have the funds retrieved. Contracts that were agreed on will need to stipulate prior the long-term risks involved in non-payment of debts and as such if everything else is unsuccessful then that route will have to be taken. Bearing in mind the laws that surround debt collection for example the fact that debtors must not be harassed, restrictions on how debtors are contacted and all other legal ramifications, the debts will be collected and secured (Chase 2017).



Chase C., 2017. Bad Debt Collection Procedures. Extracted from

NA.2017. Bad Debt Recovery. Extracted from


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