Frankly speaking, banks and other finance related companies have more or less the same policy in handling their debt management with their clients around the world. But what I am referring for this article is the approach of the business owners of small or median business or Multi-national corporations when comes to debt management issues.
Whether it’s a personal debt owing to the bank or corporate debt which customer owed to the company after purchasing the products or services from them. Most debtors will face legal prosecution by the creditor but only after several attempts from them to persuade the debtors to return the owed amount of the money.
For example, Company B (Debtor) has owed company A (Creditor) $10,000 over the period of six months after company B has purchase or consume the services provided. Company A has try to contact the business owner and even hired 3rd party debt collection agency to collect on behalf but yet company A refused to pay the amount for various reasons. This in turn will result in a legal prosecution filed by company A and both parties will have fight the case in the court of Law
and may result in either out of court settlement or even bankruptcy depending on the amount of the money owed.
For individual debtors whom has owed a substantial amount of money due to credit card’s bad debts, secured or unsecured loans. Most of them will get assistance by credit companies using the debt management programme which is basically a debt repayment plan whereby the credit company will accumulate all the various debts owed by the debtor which he will pay monthly instalment with a fixed annual interest over the course of several years.
It may be a Win-Win situation for both parties (debtors and Creditors) but debtors are usually warned that he or she will be opt out of the debt management programme if the monthly payment is default.
As the old saying goes “Prevention is always better than cure”. Companies nowadays are making more effort in their debt management policy and governments are also taking measure to educate people on the consequence of owing debts. But in this modern era, debt management will always be evolving to adapt to the challenges face by business or individuals when dealing with global business trade.