International Debt – A Growing Area of Collections

Today’s marketplace is becoming increasingly global.  With the rise of the Internet, it is possible for businesses to operate virtually everywhere.  This is a profitable turn of events, but it can also mean that a business is left with payments owed by consumers in other countries.  As each nation has its own laws, it can be tricky or time-consuming to collect on the debt of customers in other countries.

If a business has significant international debt, it may be a good idea to bring in a collection firm.  The attorneys in a collection firm may be better equipped to collect on international debt because they can easily access and better understand the law specific to each country in which the debtor resides.  An attorney may also have more time to work within the time zone differences inherent in dealing with debtors overseas – assuring that attempts to contact the debtor do not violate that country’s collection laws. 

A collection firm is also more likely to have the resources to deal with the foreign language issues that come up in dealing with international debt.  It is often the case that the business owner does not have the staff or resources to spend time reaching debtors in Asia or Europe or Africa.  Even once the debtor is reached, understanding must be achieved. 

It may be necessary to actually file suit against the debtor, as the customer is unlikely to take informal collection efforts as seriously as legal action.  In this case, it is essential to have an experienced lawyer, who is informed about diverse international collection laws, handle the case.  A collection firm that handles international debt is likely to be well versed and very busy, as it is not a huge area of practice in the US.  It would be wise for a business to utilize a proper collections attorney for collecting on international debt, creating the best possible settlement on the debt.

The Rewards and Pitfalls of International Collections

For a collections company looking to expand their business and horizons, international debt collections is a viable option to put your company on the track to more money and more clients.  In an increasingly global marketplace, companies are doing business with third-party contractors from other countries who might offer great prices at the beginning of a business enterprise but end up failing to pay. 

As this situation becomes more common, these companies and small businesses will be looking for collections agencies and collection attorneys who specialize in this unique form of collections.  Since few collections agencies offer international collections, your company would have a lucrative advantage in a specialized area that is too often under-represented in the United States. 

While the advantages and rewards are immediately apparent, there are several pitfalls along the path of international collections that should be considered before you branch out into this arena.  Below are some issues to further research before making the decision to accept international collections tasks from your clients. 

1. Different legal requirements—branching out into international collections means facing an entirely new set of legal requirements for collections practices, depending on the country where the debtor resides and operates.  These legal requirements can create hoops that are tricky to jump through and must be thoroughly researched before taking on a case. 
2. Foreign language ability—language obstacles present a significant hurdle to debt collections, and might require the use of translators to effectively communicate with the debtor and with the necessary legal agencies in the debtor’s country of residence and business operations.  This presents an added cost to your base operating expenses that is not always necessary in collections within the United States. 
3. Time zone differences—since you will be on a vastly different time zone than the debtor, this obstacle might present challenges for communicating with him or her.  In addition, as there are US laws regarding the times in which a collector can communicate with a debtor during the nighttime hours, these laws are also present in other countries, increasing the challenge. 

3 Sure Fire Ways to Collect International Debt

Image via Machinesupport.com

Over the last 3 years, more people than ever before have started to default on their debts or otherwise attempted to skip out on their financial obligations. While plenty of individuals have begun to default on their domestic debt, even more people have defaulted on their international debt. International debt is more difficult to collect due to the fact every nation has their own laws regarding its collection, and a collection agent needs to abide by these laws. That's to say nothing about the added difficulty of tracking down an international debtor.

Despite these difficulties, there are 3 sure-fire ways you can collect international debt.

1. Know the Laws Involved: Not every country have the same legal agreements between each other regarding how you can collect on international debt. For example the United States has a different set of debt collection agreements with many Asian countries than they do with European countries. If you aren't well versed in these laws, or if you don't feel like you'll be able to understand them on your own, then consider working with a lawyer well versed in the relevant laws.

2. Sue the debtor: Filing official legal actions is your best bet when it comes to grabbing an international debtor's attention. International debtors are unlikely to respond to the same light, unofficial pressures as domestic debtors so taking serious, official, and occasionally drastic measures is often necessary. Keep in mind that the actual legal process and proceedings will occur within the court of the country of your debtor.

3. Pawn the debt off: You can also sell the right to collect the debts you're currently chasing to a company better versed in international collections. This is the fastest and easiest method of receiving compensation for the international debts you're presently responsible for.

Settling an international debt isn't impossible, but it is more difficult than collecting domestic debt.