10 bad habits keeping you in credit card debt
By: Bar el Yaron, advocate
Global Credit Solutions, Israel
During this article I will discuss the debt collection possibilities in every corner of the world, excluding only countries like Somalia, Zimbabwe and other countries in the third world.
The GCS corporation, of which our office is the Israeli partner, specializes, among other things, in debt collection around the world and employs over 3,000 staff in more than 85 countries around the world. Among GCS clients are governments, banks, insurance companies and leading global corporations.
In fact there is almost no leading firm in the world, from banking through electronics to agriculture, who doesn’t make use of GCS debt collection capabilities somewhere in the world.
Difficulties in collecting worldwide debts:
Time, calls and manpower cost
Locating a reliable debt collection agency or a law firm
Very high costs for Legal Services
Differences in language and culture make it difficult to reach an agreement
Compromising relationships with the client abroad
Political problems between countries
The difficulties in collecting debts outside of one’s own country are apparent. Many country exporters are frequently faced with the problematic unavoidable need to collect debts in another country. We discovered that in many cases a lot of them simply quit the debt collection procedures and declare the debt as lost, even when the debts amount to a substantial amount of money.
The time spent on collection calls, for E-mail correspondence and other actions against the debtor is exhausting and frustrating, especially when you examine the manpower costs and the waste of time and nothing appears to happen – the debt is still outstanding.
From our experience, and this is true for any company in the world, when the debtor company is still solvent, many times the debt, outside the debtor country, is simply the last priority in the payment order – frequently at the end of the list.
The difficulties intensify when the creditor company has no choice but to use legal consultation abroad. Then there are two critical difficulties: the first is to even locate a local collection agency or a law firm that you can depend on. The second problem, no less significant, are the costs. Our experience shows that a foreign company pays, almost always, in average 50% (at least) more, in addition to the ongoing expenses.
Frequently, a difference in language and culture will create misunderstandings and not understanding the basic legal procedures in the debtor’s country, prevents reaching a settlement even when the differences are quite simple. Sometimes, a mere misinterpretation or a simple disagreement will prevent reaching a settlement and a successful debt collection.
Sometimes, and I must say that this is typical not only for for Israeli exporters there are political problems between the creditor and the debtor company. When Israel had political disputes with Turkey for example, there was a significant rise in debts not paid by Turkish companies to Israeli exporters.
GCS Concept of global debt collection:
Before we will present the solution for global debt collection problems, and since GCS is actually one of the world’s largest debt collection companies, we will try explain the debt collection potential in the world with the systemic approach, developed by GCS over the years.
The global marketplace is divided into seven (7) collecting areas, North America, South America, Asia Pacific, Western Europe, Eastern Europe, Africa and the Middle East. There are now 85 countries represented by GCS partners worldwide with several more under consideration and undergoing due diligence
All cases are entered into and managed by the unique GCS Global Case Management System (GMS) The collecting data arrives and is managed in real-time. As a matter of fact, this data enables GCS to assess, in a relatively accurate way and with combining other relevant information, determine what is the debt collection state in the countries serviced.
It is no secret that in the world today changes in the economy of one country, small like the default monetary planning of the Greek government, or large like the Subprime crisis in the USA, directly effects the entire world and as occurred during 2009 resulted in a worldwide financial crises – which is usually followed by many debt collection problems.
If we consider only the narrow area of debt collection possibilities in a chosen country, the risk analysis is relatively clear. We should take into consideration a few key factors. Among them are the overall payments morality and the debt collection system in the country we are interested in. China for example has no specific laws that regulate debt collection, the lawyers and the debt collection agencies use different “basket” laws to help them in collecting debts there.
The government type is also a factor to consider, Venezuela under the leadership of Hugo Chaves makes it very difficult for citizens and companies to purchase US Dollars and transferring them out of the country is even more difficult. Obviously there are other factors to consider like the country culture, awareness to the importance of export etc.
The solution for international debt collection problems
Use a debt collection agency or lawyer with a proven reputation and years of experience in debt collection problems, in almost in every country in the world.
The Debt is “close” – the demand to pay is from a domestic lawyer within the country of the debtor.
No restriction on the debt amount to collect. No costs at all – No collect No fee.
Debt collection with no risk or damage to business relationships between the client and the debtor.
Saves the client time, manpower and costs.
The solution for all international debt collection problems is simple and easy.
In fact when we present it, we always encounter a surprised reaction resulting usually from a lack of knowledge.
As mentioned above GCS operates threw 100 partners in more than 85 countries worldwide, employing more than 3,000 employees. Debt collection agencies or the lawyer that operates as a GCS partner, has an impeccable reputation and years of experience in debt collection problems in their own countries.
One of the great advantages is that there is no minimum debt for GCS to collect and we operate on a No collect No fee basis.
The strict ethics and best work place practices adopted by GCS partners are to ensure the collection process, at least until the court gates, is not too aggressive, and maintains a professional and courteous relationship and image.. The partners do all they can to insure that the relationships between the client and the debtor is not damaged, nevertheless the collection process is strict and professional.
All GCS partners live, feel and breath the collection procedures and problems in their own country. From our experience an approach from a domestic lawyer, or collection agency, completely changes the debtor state of mind about the debt. Suddenly the debt is “close” and the priority of paying it increases.
The collection process usually includes a notice letter, conversation with the debtor and meetings to conclude terms payment.
When some kind of an offer is on the table the GCS partner informs the client and asks for his approval or input.
After the settlement is agreed by both the client and the debtor, an agreement is signed and the debt amount is paid to the client.
When there is no agreement, or when the collecting process is stuck, the domestic GCS partner presents the client with all the legal possibilities, for him to decide, if he prefers to take legal procedures against the debtor. The GCS partner provides the client with all the costs, legal probabilities and the possibilities for collecting the debt after a court sentence is reached. After the decision is made, the law suit is usually filed in a matter of few days.
The efficiency of legal procedures changes from country to country. Naturally, the legal procedures in Western Europe are far more efficient and therefore effective then countries in South America or Africa for example.
Transferring debts for collection with a “click”
Starting to collect any amount, anywhere in the world in minutes.
Work on the case starts within 24 hours.
Getting regular updates and reports on the collecting progress.
How things actually work:
In most of the cases, the minimum information needed for starting the collection process anywhere in the world is: details about the client, details about the debtor including name, address and telephone, the amount of the debt and some supporting documentation regarding the debt (such as purchase order and copy communications with the debtor) together with an invoice, judgment etc. Obviously the more data there is on the debt, the better and it will be easier to locate the debtor and confront him with the debt.
As I mentioned before GCS partners operate on No collection No fee basis. The collecting rates are agreed upon before working on the case so there are no surprises, and a Letter of Authority is countersigned by b oth parties to protect the client’s interest.
All the data can be transferred by email, and usually there is no need for the original documents.
The case is immediately transferred to a global secure internet system and the collecting partner can view the case and start the collecting procedure without delay. GCS protocol demands that the partner accept or reject the case within 24 hours.
After accepting the case the client receives updates from the partner handling the case, and sometimes there may be a need for additional information or documents like POA etc.
The communication between GCS partners is direct and immediate and on any given time or place partners can communicate from the GCMS collecting system or via the phone to receive updates on the case.
Global debt collection system
The GCMS system – secure global internet debt collection system used by more than 100 GCS partners all over the world.
Complete transparent history of the case debt collection process with record maintained for all time.
Regular updates to the client – management reports available as required.
Storage of all the information regarding the case in one place.
Financial records in any currency.
GCS is the first and only company which has developed and operates a global collection system that connects all the GCS partners around the world – The GCMS is a web based, fully secured site that provides an automatic environment for management of any debt, anywhere in the world.
The GCMS system enables GCS partners to manage the collection cases without any need for a separate internal system. The partners feed in to the system all the information about the case, including all the details of the client and the debtor, money transfers, documents, full history and collection processes, etc. the system can provide reports on demand, which can be sent to the client.
Being a browser based technology process, the system can be accessed from anywhere in the world. It is transparent to the partners and GCS management.
GCS developers are now working on a possibility for clients to enter their cases directly from the system.
The collection process worldwide:
Locating the debtor including solvency check.
Notice letter and conversation with the debtor.
Finding out the reason for not paying the debt.
Trying to avoid legal procedures and get to an agreement.
Drafting an agreement with the client and the debtor.
If the collecting process is stuck, starting a legal procedure after the clients’ approval.
The debt collection procedures are developed and run by the GCS partners according to the specific country’s laws and culture, but the overall protocol is similar.
Whereas usually companies do not want to “burn the bridges”, and they are interested in continuing the business relations with the debtor in spite of the problems. The collecting procedures, at least until the court gates, are not too aggressive and the approach, although they use a firm professional legal language, takes into consideration the gentle delicate fabric of business relations that needs to be preserved.
Nevertheless and to remove any doubt, when the collecting process is stuck or when the debtor is refusing to pay, there is no choice other than to commence legal procedures and the approach changes to aggressive and swift legal actions in order to collect the debt as fast as possible.
When the debtor has left their last known address there is always a possibility to locate him – the procedure is simple and usually in a short while the partner has all the debtor contact information.
The initial contact with the debtor is made by the partner with a notice letter and/or telephone conversation. Usually the partner or his employee will meet with the debtor in an effort to resolve all problems that arise. The aim is to find out the reason for not paying the debt and try to reach an agreement, which will be acceptable by the client.
The great advantage of notice letters, conversation and meetings with a domestic law firm or collecting agency is in, that on the one hand the partner knows exactly how to approach the debtor, and in the other hand, suddenly the debt is “close”. The client is no longer distance creditor that may or may not reach the debtor, now there is a domestic lawyer that immediately can start legal actions. The debt is now higher in the debtor priorities then it was before.
In conclusion:
To sum up’ we can say that the global village we live in is getting smaller and smaller, and contrary to what you may think, the global debt collection possibilities are simple effective and with very small costs – as simple and effective as domestic debt collection. From our experience the success chances are not much different.
When a company is outsourcing global debt collection to an experienced professional debt collection agency all the problems and difficulties are being handled by professionals and your problems simply disappear. There are no costly lawyer fees, not to mention having to try and locate a domestic law office or collection agency that you can depend on.
As GCS partners have great experience in debt collection procedures in their own country ensuring the debt collection procedures are much faster and hassle free.
The fact that there is no minimum debt amount and that you can transfer any debt for collection, anywhere in the world in one email and get regular updates, makes the global debt collection procedures just as simple as collecting debts in your own country.
As court procedures are usually very expensive, GCS partners are instructed to try do all they can to settle debts outside of court, Usually convenient payments or forfeiting some of the interest (with the client consent) can help incentivize the debtor to sign an agreement and pay the debt. If there is no other way the partners are ready to go to court, within a few days.
As we see it is absolutely amazing that you can access a global network of thousands of employees, global internet systems, years of global debt collection experience and credibility and so much more All of that with no costs or any risk.
If the debt is not collected – NO FEE
If the debt is collected the fee is usually not much more then you are paying for domestic debt collection fees
Bar el Yaron, advocate
Global Credit Solutions, Israel
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