Debt collection refers to the "collection of amounts due". In the case of consumer loans, one speaks of debt collection when a borrower is in arrears with his instalment payment. First, he then receives reminders, with a call for payment of the monthly instalment. If, after reminders and/or reminder letters, payments are still not received, debt collection experts are called in - these can come from internal departments, but can also be external special service providers.
They try to conclude a payment agreement with the borrower (e.g. an alternative payment plan).
These efforts usually incur high costs, which the borrower has to bear in addition to the interest on arrears. The general terms and conditions or the credit agreement provide information on the extent and passing on of costs in the event of collection measures.
If a borrower has to deal with a debt collection department, it is very likely that the ZEK will also be informed. Credit institutions affiliated to the ZEK/IKO must report delays in payment by a defaulting borrower via creditworthiness codes (e.g. slow payment or debt collection measures). These facts remain on record for several years and in most cases make further borrowing or loan restructuring impossible. LEND is a member of ZEK/IKO.