WHAT RURAL AND COMMUNITY
BANKS MUST DO TO RECOVER
LOANS AND BAD DEBTS?
By ATTA GEORGE PEPRAH
The time of loan recovery.
There have been many studies conducted on the art of
collecting overdue accounts, and professional debt collectors
put a lot of loans in the results of those studies. For instance,
it’s widely understood that once loans account goes past 6
month late, it suddenly becomes slightly less likely that the
loans will be recovered. If it goes past 1year. You will have
about an 85 percent chance of collections, but let it go 3 years,
and the recovery rate drops to a little better than 70 percent.
Accounts that are 6years late have about a 57 percent chance
of getting paid and longer are not likely to be paid at all.
AaA.
Hire a Mediator
If you have tried to work it out on your own with the
debtor, but cannot seem to agree on the terms, you might
consider hiring a professional mediator. These professionals
work together with creditors and debtors to help them
reach solutions that benefit them both. If this is the route
you choose, be sure to hire a professional who has been
trained in the art.
Send a Letter
If you have tried collecting the debt yourself, but haven’t had any luck, there’s one
more thing you can try before handing the account over to a professional collector.
Sending out a demand letter, which informs the customer of your intent to refer his or
her account to a lawyer or collection agency, will sometimes spur the customer on to
action in order to avoid the related consequences. If you do send out such a letter, be
sure to give the customer the date that the payment must be received by in order to
avoid having his or her account turned over.
Offer for Settlement with costumers.
If the customer will not work with you and make payments
on the past due amount, think about offering him or her
settlement. In this scenario the customer would agree to
pay you a portion of the overall loan in return for you
forgiving the remainder of the debt. For instance, if the
customer owed you 10,000(cedis) and you agreed to 50
pesewas on the cedis, he or she would pay you 5,000cedis
and you would call it even. When doing this, you should
always attempt to collect enough to ensure that your loans
are covered, but if the debtor’s situation is dire enough, it
may be smart to agree to anything just to recover some of
the loans owed
Go to Court
If all else fails, you can take the debtor to court and sue
for the amounts that the debtor owes you. If you win,
there will be a judgment issued against the debtor
stating that he or she owes you the money. Until the
debtor pays it off, it will affect his or her credit report
and likely prevent him or her from getting credit with
anyone else. Also, a judgment may accumulates any
percent interest a year until it’s paid off, so if it takes a
while for you to collect, you’ll at least earn interest. If
the amount is under a certain limit, you will be able to
file suit in small claims court an uncomplicated and
quick process.
File a Lien
If you have taken a debtor to court and won a judgment against
him or her, but the debtor still refuses to pay, you can take the
process one step further. In most cases, you will be able to place
a lien on the debtor’s property. For instance, if you have a lien on
the debtor’s home, your judgment will be paid out of the
proceeds before it’s ever given to the costumers.
As you can see, if someone owes your business money and
refuses to pay, you have plenty of options at your disposal. Yes, it
will take a lot of time and work to make the debtor pay, but in
the end, you will gain that much needed cash flow. After all, no
matter how much you love what you do, you should be able to
expect payment for your services.
BANKS MUST DO TO RECOVER
LOANS AND BAD DEBTS?
By ATTA GEORGE PEPRAH
The time of loan recovery.
There have been many studies conducted on the art of
collecting overdue accounts, and professional debt collectors
put a lot of loans in the results of those studies. For instance,
it’s widely understood that once loans account goes past 6
month late, it suddenly becomes slightly less likely that the
loans will be recovered. If it goes past 1year. You will have
about an 85 percent chance of collections, but let it go 3 years,
and the recovery rate drops to a little better than 70 percent.
Accounts that are 6years late have about a 57 percent chance
of getting paid and longer are not likely to be paid at all.
AaA.
Hire a Mediator
If you have tried to work it out on your own with the
debtor, but cannot seem to agree on the terms, you might
consider hiring a professional mediator. These professionals
work together with creditors and debtors to help them
reach solutions that benefit them both. If this is the route
you choose, be sure to hire a professional who has been
trained in the art.
Send a Letter
If you have tried collecting the debt yourself, but haven’t had any luck, there’s one
more thing you can try before handing the account over to a professional collector.
Sending out a demand letter, which informs the customer of your intent to refer his or
her account to a lawyer or collection agency, will sometimes spur the customer on to
action in order to avoid the related consequences. If you do send out such a letter, be
sure to give the customer the date that the payment must be received by in order to
avoid having his or her account turned over.
Offer for Settlement with costumers.
If the customer will not work with you and make payments
on the past due amount, think about offering him or her
settlement. In this scenario the customer would agree to
pay you a portion of the overall loan in return for you
forgiving the remainder of the debt. For instance, if the
customer owed you 10,000(cedis) and you agreed to 50
pesewas on the cedis, he or she would pay you 5,000cedis
and you would call it even. When doing this, you should
always attempt to collect enough to ensure that your loans
are covered, but if the debtor’s situation is dire enough, it
may be smart to agree to anything just to recover some of
the loans owed
Go to Court
If all else fails, you can take the debtor to court and sue
for the amounts that the debtor owes you. If you win,
there will be a judgment issued against the debtor
stating that he or she owes you the money. Until the
debtor pays it off, it will affect his or her credit report
and likely prevent him or her from getting credit with
anyone else. Also, a judgment may accumulates any
percent interest a year until it’s paid off, so if it takes a
while for you to collect, you’ll at least earn interest. If
the amount is under a certain limit, you will be able to
file suit in small claims court an uncomplicated and
quick process.
File a Lien
If you have taken a debtor to court and won a judgment against
him or her, but the debtor still refuses to pay, you can take the
process one step further. In most cases, you will be able to place
a lien on the debtor’s property. For instance, if you have a lien on
the debtor’s home, your judgment will be paid out of the
proceeds before it’s ever given to the costumers.
As you can see, if someone owes your business money and
refuses to pay, you have plenty of options at your disposal. Yes, it
will take a lot of time and work to make the debtor pay, but in
the end, you will gain that much needed cash flow. After all, no
matter how much you love what you do, you should be able to
expect payment for your services.
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