Are You Facing Sleepless Nights in Delhi Because of Bad Debt?
If your company/you are unfortunate to have been pitched against bad debt that seems unrecoverable, you must be facing immeasurable anxiety and at the same time looking for a recoverable solution.
Know Your Rights as a Debtor!
“The biggest hurdle in the recovery of bad debt is ‘ignorance’, as the aggrieved is either uninformed or misled!”
– Kritika Chabbra (Market Analyst, MUDS Management Pvt. Ltd.
The bad debt, imperative of whether it’s a financial debt or an operational debt, can be recovered by seeking the assistance of a capable debt recovery agency or a legal consultancy firm which can initiate a legal process against the defaulter.
Taking an Informed Decision is the Only Way Out!
Under such circumstances, it is best to opt for the most effective solution and that can be ascertained only if you are aware of the various remedies available to you.
A professional recovery agency or legal consultancy firm can be the best bet for fast recovery of bad debt as it tries all options available. At first, it tries to mediate between the creditor and the debtor, striving to bring about an amicable solution. Well trained professionals are put into this work who approach the defaulter and try to persuade him to repay or may have to face legalities.
Beware of Illegal or Fake Agents!
As the problem of bad debt is growing, many agents and agencies claiming to be authentic, have mushroomed. Most of them depend on muscle power and take the illegal route to coax the defaulter in repaying the debt. Hiring such agencies may land you into legal trouble.
Letter before Action (LBA)
The first logical step towards recovery is to present an LBA to the defaulter. LBA is a formal letter that is sent to the debtor from the creditor or his authorized representative; containing all the details of the debt that is to be covered and a request for the payment of the same.
Such a letter is drafted professionally as all details pertaining to the amount or services, relevant dates, etc. are to be mentioned. It is a final warning to the debtor and if no positive response is received, then the creditor can initiate legal proceedings against the debtor.
Effective Course of Action
If steps like arbitration, mediation and LBA do not solicit a positive step, then going for legal aid is the best option. If the creditor is unable to meet his financial obligation or a firm’s liabilities exceeds its assets, hence, leading to failure in repaying the debt, then action has to be initiated.
The Provincial Insolvency Act, 1920 and Insolvency and Bankruptcy Code, 2016 are the most effective tools in the recovery of the bad debt in a time-bound manner. If the default value exceeds one lakh rupees, then the creditor may initiate the insolvency process by applying to the NCLT.
Role of a Professional Legal Consultancy Firm
Contacting an established legal consultancy firm will ensure that you are able to recover your bad debt within a stipulated time period and in a cost-effective manner. These firms have legal experts who have an abundance of experience in bringing such matters to a positive conclusion.
The initial step of drafting the insolvency petition will be done by them and then it will be filed before the NCLT. Their learned advocates will appear and plead the case and follow-up till the final order comes from the NCLT. After this, they will proceed to recover the financial or operational debt from the creditor in favour of the debtor.
“Bad debt is a problem of aplenty, but the debtor needs to be informed and aware as to how to recover it at the earliest.”
-Shweta Gupta, Founder and CEO, MUDS