Attempting to collect a debt from an international debtor can be impossible in some cases. This is why you may want to turn to an international debt collector for a solution. Companies that specialize in debt collection have the knowledge and resources needed to deal with the systemin their country, but often also throughout the world. They know which countries are difficult and which ones are not. With this type of assistance in your corner, you increase the chance of getting what is owed to you.
A debt collector may be a route you want to take because international debt collection is timeconsuming and very frustrating. There are common issues that exist,such as a lack of regulations, unorganized court systems, and insolvency among debtors.
A Lot Depends on the Courts
The World Bank conducted a study in 2014 that looked at international debt collection and the ease of doing business in countries around the world. This resulted in the “Economic Outlook no. 1213” white paper that lists the countries from easiest to hardest to work with.
The World Bank revealed why some countries are easier to do business in than others are. For instance, a debtor that must be sued to recover just a percentage of the debt will most likely pay if its country has a cooperative court system. Many don’t. However, Japan and Germany do. They were listed as the top two countries to do business with. India and Saudi Arabia, on the other hand, were at the bottom of the list because of corruption and poor procedures.
Navigating Lack of Regulations
Another reason why foreign debts can be so difficult to collect is that some countries have no regulations. Others have very few regulations. If you don’t have rules to back you up when collecting the debt, the collection process can be very difficult. Some creditors give up and others stop doing business in those countries completely if they are losing too much money.
Some creditors have started raising their international interest rates to offset their losses. An article in the New York Times looked at this because some experts say that how much interest a creditor charges should be capped. Other experts say that capping would have a negative impact on consumer lending. International experts say they can’t deal with higher rates than they are already dealing with.
In cases where a country has good regulations, they can be very different from those of other countries. An international debt collector will know this. One thing that seems to work universally between many countries with varying regulations is a strict contract. Even if the court system is unorganized, having a strict contract in place can help with debt recovery. This is because even unorganized courts may take breach of contract seriously. Having a good contract in place could have a positive impact on your endeavor.
All in all, the court system is what it all leans on. If a creditor decides to do business in a country with a weak court system, there can be many difficulties. Debts turn into losses for creditors and that can alter the decision to do business in that country, especially when the risks outweigh the benefits. However, an international debt collector can be a great asset in these cases, which can make doing business in these countries worthwhile.
Battling Insolvent Debtors
The last major issues that creditors face is foreign debtor insolvency. When the debtor has no money to pay the bills, the chance of collecting on the debt dwindles. Many countries aren’t like the U.S.,where the assets of the debtor can be seized and liquidated. The proceeds from the liquidation pay off creditors. This process is much more difficult in other countries, especially those with weak courts.
If the court system is more organized, insolvency is easier to combat. Even when a creditor receives a partial payment, it can be a victor. Having an international debt collector helping you can also result in getting debtors to opt for debt restructuring so they can pay back some or all of their debt in a way they can afford. The rules and regulation of the country determine the solution.
International Debt Collection Helps
When you have an international debt collector helping you, you have someone who is knowledgeable of the way different countries work. When a creditor decides to take the risk of doing business in a specific country, it is good to have an international debt expert onhand to handle any collection issues.