What is Personal Debt Collection?

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  • Written By: Ken Black
  • Edited By: Andrew Jones
  • Last Modified Date: 27 August 2019
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Personal debt collection is the process of collecting money that is owed to a private individual, typically by another private individual. Collection of personal debt may be harder for an individual than a company, simply because most do not have the experience and resources needed to properly execute a collection strategy. Typically, the debt is unsecured, which only works to make collection even more difficult because the individual does not have a personal stake in paying it back. Often, personal debt collection involves use of a lawyer or going to small claims court.

Often, the first step in the process of personal debt collection begins with an initial contact to the person owing the debt. The best way to do this is by letter. The sender should keep a copy of the letter, and send the original by certified mail, with a return receipt requested. This allows the sender to document the attempt, which will provide credibility to the claim in court. Of course, it is also advisable to have a signed agreement regarding the debt before the money is ever provided; without this, it may not always be possible to collect.


If the attempt to first settle the debt is unsuccessful, subsequent attempts may involve more letters, possibly with an attorney. If the collector decides to use an attorney, he or she should get a quote on the price before making the hire. Each individual needs to determine whether hiring an attorney is worth it. Typically, a good rule of thumb to use is to only hire an attorney if the cost of the attorney will be less than half of what the debt is.

When these attempts still does no work, the personal debt collection process will typically involve going to court, or at least filing a claim. The threat of going to court may prompt the individual to settle the debt. If not, a clerk of court can provide individuals with forms to file a small claim, or at least direct a person to an appropriate resource. Often, a plaintiff does not need to use the services of an attorney for small claims unless there is some unusual complication.

The most important thing to do when facing a personal debt collection is to document as much as possible. This includes having paper trails for the existence of the debt, as well as each attempt to collect it. While verbal agreements are typically legally enforceable, it may be harder to prove the existence of that agreement unless both sides stipulate that it was made. Having it written down removes any doubt.


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