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Collection Terminology

Debt Collection Terminology to explain basic explanations terms you may hear regards debt collection process and procedure.  Here are some laymans terms to make things easy:

  • Call – making a phone call.
  • Letters – letters of demand to the customers.
  • Demand letter – as above.
  • Final demand – final demand prior to going legal or options.
  • Field calls – when a process server or field agent goes to the last known address and tries to interview the customer or gather information as to where they have gone to.
  • Repossessions – when a section 88 order has expired and (usually) a vehicle can then be legally repossessed.
  • Legal – the process in which a debt goes through the court process.
  • Liquidation – when a company has been put in to liquidation – stopped trading.
  • Bankruptcy – when a person goes bankrupt (has an ITSA number).
  • Statement of claim – served on a debtor to go to court so we can get judgement.
  • Judgement – a court order telling the debtor that they owe the amount of money to the applicant.
  • Credit Default – a default on a customer’s credit file.

More: Debt Collection Terminology

  • Fraud – when fraud has occurred in the process (misrepresentation, deception, fake identification etc.
  • Dialler (predictive) – when volumes of overdue clients are put into a collection system and an automatic (predictive) phone dialler is used to put the customer’s details on a computer screen and rings the person at the same time ready for the collector to speak to them.
  • Roll rate management – refers to the process of having accounts “roll” between the “buckets”. “Buckets” refer to the breakdown of the days overdue in the cycle. These are usually 0-30, 30-60, 60-90, 90-120, 120-150, 150-180, 180+ days past due (dpd).  Ideally you want the roll rate (or account numbers in each bucket) to decrease. In a perfect world, you want the accounts to be “cured” – taking the balance outstanding back to zero. The less files that roll up though decreases the potential amount that will reach 180 days plus – which in most larger institutions is a write off trigger.
  • Cure rate – when an overdue account has been cured back to current – zero days overdue – the cure rate is how many of these accounts have happened against the amount referred.
  • Recovery rate – how many accounts have paid versus how many were referred?
  • Historical data – data collected over a period of time.


  • Debt purchasing/debt buying – some companies are able to sell their debt – the most wanted by the debt buyers is bank debts (credit cards/personal loans/transaction accounts in particular), finance company debts, automotive finance, telecommunications and of late some utility debts. One off debts and very small debts are very unlikely to get purchased. The game is about spreading the risk so one debt or a handful are just not attractive. Unless there is some security in play, the buyers would not want to know. If there is security, we can help – but not to purchase it – we can look at collection.

Debt Collection Terminology in laymans terms will assist you in the first instance.

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