What are the differences between amicable recovery and legal recovery?
Are you having difficulty recovering your debts? Are you hesitating between an amicable approach and legal action? GESTION CREDIT EXPERT, debt recovery company , enlightens you on the distinctions between amicable recovery and legal recovery . Our goal: to help you maximize your chances of success while preserving your customer relationships.
What is the difference between an amicable procedure and a contentious procedure?
The recovery of unpaid debts is a frequent problem for businesses. Two main options are available to them: amicable recovery and legal recovery.
The main difference between these two procedures lies in the method used . The amicable procedure favors dialogue and cooperation between the parties in order to find common ground. On the other hand, the legal procedure involves the intervention of a judicial authority, such as a court, which will settle the dispute if no amicable agreement is reached.
Amicable recovery
Amicable recovery is a process aimed at obtaining payment of an unpaid debt outside of any legal procedure.
The objectives of amicable recovery
Amicable recovery pursues several objectives:
- Obtain payment of the unpaid debt .
- Preserve the customer relationship by finding a satisfactory solution for both parties.
- Avoid legal proceedings. Amicable recovery is a cheaper and faster alternative to legal action.
The mesures that took place
To achieve this objective, several means are generally deployed, including:
- Telephone reminders allow you to enter into direct contact with the debtor and make them aware of the situation.
- Letters , such as formal notices or reminder letters, can be sent to the debtor to remind him of his payment obligation.
- Negotiation : the creditor can offer the debtor a staggered payment plan or a reduction of the debt in order to find a mutually acceptable solution.
The advantages and disadvantages of amicable recovery
Amicable recovery has several advantages:
- Preservation of the commercial relationship : by favoring dialogue and the search for a common solution, amicable recovery makes it possible to maintain good relations between the creditor and the debtor.
- Speed and efficiency : amicable recovery is generally faster and less expensive than legal proceedings.
- Simplicity : administrative procedures are simplified and recourse to a lawyer is not necessary.
However, amicable recovery also has limits:
- No guarantee : There is no guarantee that the debtor will pay the debt, even after a payment plan is in place.
- Payment deadline : amicable recovery can take time, especially if the debtor disputes the debt or refuses to cooperate.
- Legal limits : amicable recovery is subject to strict rules which must be respected. Failure to comply with these rules may expose the creditor to sanctions.
- Expertise : amicable recovery often requires a certain expertise in conflict management and communication. This is why it may be wise to call on a specialized company.
Judicial recovery
Judicial recovery (or contentious recovery) consists of obtaining payment of an unpaid debt through legal action. This is an option to consider when amicable efforts have not been successful.
The objectives of legal recovery
The main objective of judicial recovery is to force the debtor to pay his debt . It can also make it possible to obtain damages in the event of harm suffered by the creditor.
When should legal recovery be considered?
Judicial recovery is considered when all attempts at amicable recovery have failed .
For example :
- When the debtor refuses to pay despite reminders and amicable negotiations,
- When the amount of the debt is large and the creditor considers it necessary to obtain a court decision to recover what is owed.
What are the stages of a legal recovery procedure?
The legal recovery procedure takes place in several stages:
- Formal notice
This consists of sending a registered letter with acknowledgment of receipt to the debtor, asking him to pay the amount due within a specific deadline. The letter must mention the amount of the debt, late payment interest and any costs.
- Obligation to pay
If the debtor does not respond to the formal notice, the creditor can request an order for payment from the court. The court will issue or not issue a partial or total order requiring the debtor to pay the amount due.
- Service of the order for payment
If the injunction is granted, it must be served on the debtor by a bailiff.
- Execution of the order
If the debtor does not pay the debt, the creditor can request compulsory execution of the order through a bailiff.
The advantages and disadvantages of legal recovery
This solution is effective, in particular thanks to:
- Guaranteed recovery : decisions rendered by the courts are enforceable, which means that debtors are legally required to comply with judgments rendered against them and therefore settle their debt more quickly.
- Legal protection : legal recovery indeed offers legal protection to creditors.
- Dissuasive intervention by an impartial third party (such as a collection company): the threat of legal action can dissuade debtors from not honoring their obligations. Knowing that they could be sued for non-payment can encourage debtors to settle their debts more quickly.
- Respecting deadlines : Legal proceedings often impose strict deadlines on the parties involved, which can speed up the collection process by avoiding prolonged delays or delaying tactics by debtors.
- Use of coercive measures : in the event of voluntary non-payment on the part of the debtor, judicial recovery may allow creditors to use coercive measures such as seizure of property or deductions from wages to recover the amounts owed.
It can also have disadvantages and often certain repercussions, such as:
- The high cost : it is indeed necessary to take into account the court costs, the lawyer’s fees and any bailiff’s fees which will be in addition to the fees of an agency specializing in legal recovery.
- Duration : the legal recovery process can take several months, or even several years, before a final decision is rendered.
- An impact on the relationship : recourse to justice can harm the relationship between the creditor and the debtor. It is important to remember that the legal process can be a source of stress and tension.
Comparison of the two methods
The choice between amicable recovery and legal recovery depends on several factors , such as the amount of the debt, the nature of the relationship with the debtor and the desired speed of recovery. Here is a summary table of the criteria to take into account when making your choice:
Which method to turn to? And in what cases?
If the amount of the debt is relatively small and the debtor is likely to cooperate and settle the debt, amicable recovery is often the best solution. This approach helps preserve commercial relationships and avoid the costs and delays associated with legal recovery.
On the other hand, when amicable recovery fails or when the debtor refuses to pay despite reminders, legal recovery becomes necessary. Mandating a collection company can then guarantee you good control of the costs linked to the interventions of the bailiffs and lawyers that they will manage for you.
Don’t let unpaid debts compromise the financial health of your business. Call on GESTION CREDIT EXPERT for professional support and proactive management of the recovery of your debts.
Importance of Selecting a Suitable Collection Company
To recover a debt, whether through amicable action or legal action, using a collection company is a strongly recommended solution .
Indeed, collection companies know the steps to follow and the tools to use to maximize your chances of success, as quickly as possible. They also guarantee that your rights and those of your debtors are respected. Additionally, using a collection company can help you preserve your relationships with your customers. They are trained to handle delicate situations with tact and diplomacy.
Choosing a collection company like GESTION CREDIT EXPERT means choosing a trusted partner who will support you in your efforts with expertise and professionalism.