Debt collection is a complex and delicate activity that requires specific skills and a thorough knowledge of current regulations. In the case of B2C debt collection, that is, in business-to-consumer trade relations, the challenges are even greater.
Consumers are subject to different regulations than businesses, and they have rights that must also be respected in the context of debt collection.
The normative reference
B2C debt collection is governed by the Consumer Code, which provides a number of consumer protections. In particular, the Code prohibits the application of unfair terms in consumer contracts, and requires the company to adopt fair and transparent behavior toward the debtor.
The stages of B2C debt collection
B2C debt collection can be divided into two main stages:
- The out-of-court phase is the first stage of debt collection, and it takes place without court intervention. At this stage, the company attempts to recover the debt directly from the debtor through a series of actions such as reminders, cease-and-desist letters, and interviews with the debtor.
- The judicial phase is the second stage of debt collection, and it takes place in court. The company can initiate legal action against the debtor only if the out-of-court phase is unsuccessful.
Strategies for B2C debt collection
For successful B2C debt collection, it is important to adopt a strategy that takes into account the following variables:
- The amount of the loan: large loans require a more aggressive approach than small loans
- The debtor’s financial situation: if the debtor is in financial difficulty, a more conciliatory approach should be taken
- The relationship between enterprise and debtor: if the relationship between enterprise and debtor is positive, it is also possible to recover the debt through an out-of-court settlement
Actions to be taken out of court
At the extrajudicial stage, it is important to take the following actions:
- Send a payment reminder: a payment reminder is the first step in recovering an outstanding debt. The reminder must be sent in writing, and must contain all the necessary information, such as the amount of the claim, the due date, and the method of payment.
- Send a cease and desist letter: if the payment reminder is unsuccessful, a cease and desist letter can be sent. It must contain a warning to the debtor that, in case of non-payment, the company will go to court.
- Conduct an interview with the debtor: if possible, it is advisable to conduct an interview with the debtor. The interview can be an opportunity to understand the reasons for nonpayment, and to find a consensual solution.
Actions to be taken at the judicial stage
At the judicial stage, the following actions can be taken:
- Initiate an injunction action: an injunction action is a quick and simple process that allows the company to obtain an enforceable title.
- Initiate an enforcement action: an enforcement action is a procedure that allows the company to recover its debt by seizing the debtor’s assets.
B2C debt collection is a complex and delicate activity that requires specific skills and a deep understanding of current regulations. The strategies described in this article, combined with dedicated debt collection tools such as CreditSuite, can help debt collectors recover outstanding debts successfully.