Debt Recovery Techniques

Creditors that cannot recover debts from consumers lose money. Thus, unpaid consumer accounts cut into a company's profit margin. To keep the company profitable, corporations and small businesses alike use a variety of debt recovery techniques when collecting debt, although the exact methods used vary by company. A collector may use only one or all of the debt collection options available when attempting to recover unpaid consumer debts.

Creditor Contact

Direct contact with the debtor is a creditor's primary debt recovery method. Direct contact includes telephone calls, emails and letters that inform the consumer of his responsibility to pay off his account. Creditors have the right to call or send as many letters and emails as necessary unless the company is a third-party collector, such as a debt buyer. Collection agencies and other debt buyers must take care not to threaten or harass the consumer when contacting him about a debt because such behavior is prohibited under the Fair Debt Collection Practices Act, FDCPA. The FDCPA, however, does not apply to the original creditor.

Wage Garnishment

Should a debtor refuse to pay off his debts after repeated requests by the creditor to do so, the creditor may sue him and file a request with the court to garnish his wages. Should the creditor receive a wage garnishment, it can order the debtor's employer to withhold and redirect up to 25 percent of his pay to the creditor each pay period. This continues until the consumer pays off the debt. Not all states allow this practice. Texas, for example, does not permit creditors to collect consumer debt through wage garnishment.

Bank Levy

Similar to wage garnishment, a bank levy occurs after a lawsuit. Rather than serving the garnishment order on the debtor's employer, however, the creditor serves the debtor's bank. The bank freezes the individual's accounts -- denying him access -- and turns over all non-exempt funds to the creditor. Exemptions that commercial creditors, such as hospitals or credit card companies, cannot seize include federal benefits, unemployment and child support.

Real Estate Lien

Real estate liens restrict an individual's ability to profit from the sale of his own property without paying off a creditor's lien. Like wage garnishments and bank levies, real estate liens require creditors to win a lawsuit against the property owner. After a creditor attaches a real estate lien to a debtor's property through the Land Records Office in his county of residence, the debtor must pay off the debt before refinancing the home.

While consumers can transfer ownership of a given property with a real estate lien still attached, most cannot sell the home without paying the lien. This is because few mortgage companies, if any, will finance a buyer to purchase a home until the property owner clears any existing liens.