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How Debt Collection Agency Business is affected during Corona Pandemic?

Posted by maxbpoblog Aug 17,2020

debt collection services

Debt Collection agencies provide the debt collection services to recover the bad debts owed to DCA’s clients (creditors) by consumers (debtors).

These services are used when the creditors have tried to recover defaults on their own but were unsuccessful. In such scenarios, debt collection agencies act as a middleman by collecting the customer’s debt and convey them to the original creditor.

Debt collection agencies collect all types of debts like- personal loans, business loans, medical, credit card, automobile loans and even cell phone bills.

What Debt Collectors Do?

For collecting the debt, Debt collectors try to contact the delinquent borrowers and try to convince them so that they can repay what they owe. A debt collector has to depend on the debtor to pay and cannot seize a paycheck unless they take the debtor to court and win a judgement against them. Debt collection is a time-consuming process, and the recovery agencies help to resolve the issue and give solutions for the recovery of debt and increasing cash flow business.

Impact of Covid-19 on Debt collection companies

The Covid-19 crisis is having a severe impact on the economy, which includes the payment options of debtors and bill-paying customers as well.

New economic changes are also significant for the process of the sector, but their impact is different in the short and medium-term.

Unfortunately, the Covid-19 crisis will increase the number of overdue loans and utility bills in the medium term.

The outcome of Covid-19 on any part of the business of the customers can cause-

  • Have their business shut down
  • Delay or defaults on payments
  • File for bankruptcy
  • Delay payments

Due to Covid-19, legal systems have to shut down in some countries and in others opened in a limited manner.

Here is a list of states where debt collection activities are partially or entirely ban from the state regulators-

Massachusetts– According to a notice from Massachusetts Comptroller of the Commonwealth, State-own debt and other collection activities are temporary on hold until April 7.

New York– The state will cease the collection of medical and student debt which was announced on March 17 by the Attorney General and Governor of New York.

North Carolina– The collection of State-owned debts is suspended until further notice has come.

Chicago– The announcement has been made by the Mayor of Chicago that the city will be temporarily suspending debts collection as well as penalties for late payments.

South Carolina– To help people in financial distress caused by Covid-19 pandemic, the state Governor enacted a 60-day ban on medical debts collection.

Due to Coronavirus, many court cases have been postponed, and only urgent proceedings continue.

There might be delays in collecting the debts by the agencies because due to lockdown, it is harder to reach the debtors. And the debtors are unable to pay because of the business shutdown.

There might be a negative impact of Covid-19 on debt collection, but it depends on industries of debtors, countries and regions, and these factors affect the chance of collection.

As Max BPO being one of the best debt collector agencies, we represented in many parts of the world. Our professional team has decades of experience in helping companies in providing debt collector services.

If you like to discuss further with us about our services, feel free to join hands with our experts today.

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