When we chose to go with a debt collector, we received a lot of feedbacks that discouraged us from doing so. Basically, it was seen as a negative way of handling the situation.

From my own rationalization, these were the pros that outweigh the cons:

• The debt collectors help to remove some stress in chasing for the bad debt; they saved us time and money and gave us a peace of mind.

• They are experienced and have their ways to recover the bad debts which we were unable to do so. This third party involvement has proved very effective for us.

• They allow you to combine the bad debts and collect the total figure on your behalf. (this would prove useful is you have very small amounts of debts from other debtors that would be a time waster to chase after)

The reasons why others dissuaded us are listed below and my rationalization are in blue:

• They cost us money and it is not a guarantee that we would be able to recover our bad debts.

  • We had to pay a flat fee upfront and are charged a hefty commission on the amount of bad debt collected. I figured this was no big deal, I rather pay the debt collector to do his job than to give away my money to a dishonest business.
  • Doing business is all about weighing the risks and returns. Nothing is a guarantee and after accessing our situation, this was a risk well worth taking.

• There is a risk that the debt collectors may use unorthodox methods to recover the bad debts and we risk our reputation as such.

  • An indemnity form was signed and it states that we did not request for the debt collectors to use illegal ways to recover the bad debts.
  • Do select the right debt collectors to do the job; check on their ACRA status and communicate with them to understand more before engaging them.

In my next post, I’ll share more with you about how we access that the debtor was insincere in repaying our debts and why we choose to use a debt collector instead of bringing them to the Small Claims Tribunal.