“A debt collecting firm is known for getting the money that needs to be paid. They know all the tricks that would work in order to get the work done. But due to the increased number of debt collecting firms in the market, it at times is a task to find one that matches your needs. Here is where we can help you.”
-Kritika Chabbra (Market Analyst, MUDS Management Pvt. Ltd.)

The various steps to be followed while opting for a Debt Recovery firm are as follows:

Step #1: Doing a Thorough Market Research

There are certain specific areas that each debt collection agency specializes in. For instance, a few specialize in acquiring funds from large companies. On the other hand, there are few that do well while working with home-based or small businesses.

It is thus important to do thorough market research. It helps in finding as well as analyzing the results of each of the debt collecting agencies and it also provides a fair view of the kind of debtors that the collection agency specializes in dealing with and also the kind of business it serves.

Step # 2: Authenticating the Agency’s Legitimacy

The rules for the various debt collection agencies operational in various states and localities vary. Hence, it is important to check thoroughly. One should note that agency you opt for must adhere to the rules set by the Fair Debt Collection Practices Act. They should be bounded and license as well.

“The thing to note is that once you have hired an agency, you won’t be receiving the entire amount that you owed. Thus, it is advised that you exhaust all the other available options before hiring a debt collecting agency.”
— Isha Malik (Company Secretary, MUDS Management Pvt. Ltd.)

Step # 3: Check with the Agency If the Use ‘Skip Tracing’

In order to battle the practice of debtors skipping town, the collection agencies have started using ‘skip tracking’. Here, the agency has access to a lot of databases which actually allows them to find out the debtor who had actually left without any forwarding address.

This becomes even more important when you have been contacting your debtor for long but have been routinely ignored.

Step # 4: Making Sure That the Agency You Opt For, Has Insurance

In case, the debt collector agency uses aggressive tactics or acts in bad faith, all your research goes in vain. In any such instance, the debtor can sue. Even if you win or you don’t win the case, one wishes to be sure that he/she won’t be held liable for the hiring agency. Be sure, and get proof of insurance from the debt collection agency in an unlikely event that the debtor takes both the parties to court. This is also known as ‘errors and omissions insurance’ and is held by good agencies as protection.

Step #5: Evaluate the Fees and Contingency Costs

It is important to look into the cost before actually finalizing an agency. It is important to evaluate the cost as the way each agency functions, is very different from one another.

“Dealing with debtors can be slow, frustrating and mentally taxing. It can even drain all your resources. When you find yourself stuck without any other resource left, it’s advised to hire a debt collector instead of simply letting the debtor run away with your hard earned money.”
-Shweta Gupta, Founder, and CEO, MUDS

The post Tips To Hire Debt Recovery Firm appeared first on MUDS.

While registering insolvency professional agency, the Board must remember that professionals are there to promote:

1. Professional development and regulation of insolvency professionals.
2. Services of competent insolvency professionals.
3. Good professional and ethical conduct among insolvency professionals.
4. Interests of debtors, creditors and other persons as specified.
5. The growth of insolvency professionals agency.

“Every person needs to have a certificate of registration issued on behalf by the Board in order to carry its business as insolvency professional agency under the code”
Divya Gupta (Market Analyst, MUDS Management Pvt Ltd)

Who is Eligible to be Insolvency Professional Agency?

Only if a company registered under section 8 of the Companies Act, 2013 and satisfies conditions, it is eligible to be Insolvency Professional Agency –

1. The sole objective is to carry the functions of an insolvency professional agency.
2. Has bye-laws and governance structure in accordance with IBBI.
3. Has a minimum net worth of 10 crore rupees.
4. Has paid-up share capital of 5 crore rupees.
5. Is not under control of person(s) resident outside India.
6. Not more than 49% of its share capital is held by persons outside India.
7. NBFCIs not a subsidiary of a body corporate through more than one layer.
8. Itself, its promoters, its directors, and persons holding more than 10% of its share capital are fit and proper persons.

“Every insolvency professional agency needs to make bye-laws in line with the model bye-laws as specified by the Board under sub-section (2) or section 196 subjected to the specifications made in the Code and any rules or regulations made within it and after necessary approvals of the Board”
Isha Malik (Company Secretary, MUDS Management Pvt Ltd)

Top 4 Points about Model Bye-Laws:

1. The bye-laws along with the application for the registration need to be submitted to the Board.
2. The bye-laws will be applicable for all matters specified in the model bye-laws.
3. The bye-laws will hold at all times as the model bye-laws.
4. The agency needs to publish its bye-laws, the composition of all committees formed, and all political created under the bye-laws on its website.

Whose over IBBI?

The Board has made regulations in order to ensure that every insolvency professional agency follows the objectives mentioned under the code:

1. The setting up of a governing board.
2. The minimum number of independent members to be on the governing board.
3. The number of insolvency professionals being its members who shall be on the governing board.

“ Modi government has no doubt introduced a very robust insolvency resolution system that will highly benefit the nation”
Shweta Gupta (Founder & CEO, MUDS Management Pvt Ltd)

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