1. The debt collection trade is an ancient trade
Debt collection has been around as long as there has been debt and is older than the history of money itself. The trade goes back to the ancient civilisations, starting in Sumer in 3000 BC. In these civilisations if a debt was owed that could not be paid back, the debtor and the debtor’s spouse, children or servants were forced into “debt slavery“, until the creditor recouped losses via their physical labour. (source: wikipedia.org)
2. Governments are among the biggest clients of debt collector agencies worldwide
You may not have guessed it, but governments around the world engage debt collectors to help to crawl back bad debts. It is such an important procedure that there is even a legal Act by the US government to help govern and regulate the collection of debts owed to the US government. The Debt Collection Improvement Act of 1996, also known as the DCIA, controls the whole debt recovery procedure and collection tools used for collection of non-tax US federal debts.
3. The debt collection trade is huge and well worth $100 billions of revenue dollars
Collectors recouped almost $54.9 billion in missed debt payments in 2010 alone in the States and the debt collection is ever growing. (Source)
4. Debt Collection is a professional process
Many people had the wrong impression of the debt collection trade, that it is a rogue trade only done by mafias and gangsters or ‘Ah Long’. The actual fact is, this is an age-old trade that has been in existence longer than most professions. It has its own six-sigma processes that the professions undertake professionally, and to operate within the boundary of laws of the states. Though it is undeniably that there are indeed bad eggs in the industry that opt to operate within the grey zones of the laws. Thus it is important that one choose to work with the right debt collection agency to adopt proper debt collection tactics.
5. Debt collection has personal implications
This might sound commonsense, but many people seems to believe that as long as one choose to default, there is letter the debt collector can do against them legally. The truth is, when a debt is filed against you, you will have a negative mark in your credit bureau and this has long terms impact on your personal reputation with the banks. When you want to take a future bank loan, mortgages and cash credits, or even a credit card, the fact that you have unpaid debt and have creditors after you, the banks will likely reject your applications.
If a debt collector does not agree to remove a paid collections account from your credit report, that account remain on your report as a negative mark n your credit for 7 years!
6. Debts do not last forever
The good news for debtors, and bad news for creditors though, is that, there is a statute of limitations on debt collection. This means an ‘expiry date’ of the debt. In Singapore, the statute limitation of debt is 6 years. After 6 years of no contact, a debt can no longer be legally collected. That being said, if you are being owed money, you must take actions before the 6 year ‘expiry’, else you might see your money owed vanished into thin air.