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Role of a Debt Collection Agency in Commercial Debt Recovery

Debt collection or debt recovery is the process of collection of debts owed by individuals or businesses in Dubai, Sharjah, Abu Dhabi or United Arab Emirates. In today’s fluctuating economic scenario, thousands of cases are reported where debts are not repaid and it becomes a headache to extract them. Commercial debt recovery is a huge market, where small as well are large scale businesses are unable to pay back the capital they borrowed or the services they used.

The Role of a Debt Collection Agency

Debt recovery is a major issue across the world. Time and again, new methods have been applied to solve this problem. From forced slavery to mortgaging property, every method has been applied, but there were cases where the debtors fled or they didn’t have any property that could be mortgaged.

It became more and more difficult to collect debt with cases of fraud, identity theft and delinquency becoming common. There was a need for professional agencies with well qualified attorneys and people with area specific jurisdiction.

Debt recovery agencies were created to fulfill these demands. These agencies pursue debts on behalf of their clients by employing experts to extract debt. These agencies try to recover the debt without much involvement of legal action and court orders, but if required the attorneys can take legal help to recover the debt.

In such cases, agencies represent their clients in civil courts against the debtors. They recover the debt in a manner that is conducive to the client as well as the debtors, making debt recovery hassle free.

Types of Debt Recovery Agencies

In any debt contract there are two parties involved, first party (lender) and second party (debtor). Collection agencies are categorized into first and third party agencies according to the same terminology.

  • First Party Agency: It is a department or the subsidiary of the lending company. It gets involved in the debt collection process early. It is free of legislation that governs the third party agencies because it is a subset of the original lending company. It tries to recover the debt for a few months and if and when they are unsuccessful, then the job is passed on to the third party agency.
  • Third Party Agency: It is called as such because it is not a part of the original debt contract. It is neither a part of the first party agency. The third party agency collects the debt at a fee which is usually some percentage of the debt recovered. The percentage charged depends on the stage of the debt; the more advanced the stage, the higher the commission. Most of the times the full debt is not recovered, but the agency is only paid when some amount of the debt is collected. This is called the “No Collection-No Fee” Typically anywhere between 25 to 45% of the debt recovered is used as the fee.

How do Debt Collection in Dubai or Debt collectors work?


Debt collectors Dubai are called for help generally at a very late stage when no amount of court summons and warnings make the debtor repay his or her loans. The lending company depends on the first party agency for about 6 months after the debt becomes outstanding. First party agencies call and issue warning notices to the debtor. If unpaid, the frequency of this communication increases.

Once a third party agency is contacted, stringent methods are used to extract money from the debtor. Third party collection agencies work in an interconnected network, which helps them track down the debtor and also analyze their assets and liabilities in detail.  Some common methods used by collection agencies to recover debts are:

  • Levies: If the debtor has a saving or current account in any bank, collectors can learn this information from the debtors credit report and serve the bank with a levy. The account is frozen and typically 21 days are given to the account holder to justify the due debt. In case a proper justification is not received, the money starts to get deducted from the account till the debts are not repaid.
  • Attachment: This works in a similar fashion to the security demanded by banks while providing loans. In case the debtor has some kind of property; land, house or vehicle, it can be used to pay off the debt. But there are strict regulations for selling personal assets to repay the debt. In some countries, the house of the debtor can’t be used to repay the loan if that is the only house in his or her name.
  • Wage Garnishment: This is the most common method used by collectors to recover debt. Wage garnishment can only be applied when the debtor has a job. Collector agencies directly contact the employer and money is deducted from the pay check of the debtor.  

Debt collection agencies are a ray of hope in the confusing lending-borrowing business. If your debtor or client frequently changes his or her personal information and address, complains about slow business, denies continued requests for legal documents; it is time you utilize the services of one of the debt recovery agencies and save yourself from future hassle.


DISCLAIMER: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific or legal advice on the information provided and related topics, please contact us.

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    • Rosa
      May 14, 2017, 5:15 am

      I win a commercial case in sharjah. I applied for execution. And now I come to urgent travel . So I need company do it for me . Please let me know how long take time and how much percentage you looking for.

      Leave a reply
    • Callum Palmer
      May 25, 2018, 10:15 pm

      It really does help to know the different kinds of debt collection agencies that are out there, especially if you are looking for one for commercial use. After all, you want to be able to do your research into which kind of agency will be able to support your business the best. For example, it might be helpful to know when a company should fall back on a third party agency for help.

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