Soft collections are a term used to describe the collection of bad debt by means other than legal action. This process is implemented before legal action is instituted as a last effort to collect monies due quicker and at a lower cost.
Before the soft collection phase may commence it is often necessary to trace a debtor, Vermeulen Attorneys offer this additional service of tracing and we ensure that each matter handed over is vetted. The vetting process looks at the feasibility of the handover in focussing on the debtor’s means and credit record.
This is an important tool and may prevent that the client unnecessarily wastes money in pursuing a debt which is not collectable.
A matter is normally in a soft collection phase for a month (30days) however, this is depending on the client’s preference. The following steps and tools are used in this phase:
SMS sent to inform the debtor that he/she has been handed over
Should a PTP not be made, a letter of demand will be sent via email and registered post and the matter will proceed to legal action.
Tools used during the soft collection phase:
If the available contact details or information on the debtor is outdated, our offices attend to a trace of the debtor using the resources available to our offices
INTERNAL DEBTOR VETTING
Credit bureau checks to verify whether the debtor is still trading, whether any immovable property is registered to their names. Google searches and telephone verification of trade status and address verification.
CREDIT/ BAD DEBT LISTINGS
Should your agreement make provision for listing on the credit bureaus, a letter of demand will be sent and the default listed on the credit bureaus. This severely impacts a person or entity’s credit worthiness.
Sms’ are sent to debtors as an introduction, informing them of handover as well as during the collections process as reminders.
Phone calls are made to introduce ourselves, inform the debtor of handover, negotiate payments. Calls are also made as reminders for payment as well as follow ups on payment.
The first email sent to the debtor is an introduction, informing debtor of handover, confirming any payment arrangements and asking for proof of payment.
LETTER OF DEMAND
Letter of demand is sent when the debtor refuses to make arrangements/payments. The letter gives the debtor 10 days to respond, failing of which legal action will be instituted.
ACKNOWLEGEMENT OF DEBT
Acknowledgement of debt is sent when a payment arrangement is made with the debtor. This makes your case a bit stronger should the matter go to court. A surety can also be added to the Acknowledgement of Debt. This is a good idea if your debtor is a juristic entity.