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How does debt collection work?

Debt servicing costs are only taken from the cash flow that is recovered from a delinquent loan; investors never pay these fees up front. These payments are used to cover the costs related to the collection of loans in a delinquent portfolio, in particular, the following fees are included:

  • State fees
  • Court fees
  • Success fees paid to debt collection agencies
  • Fees for the lawyers and any other costs related to the collection.

If no cash is recovered then no deductions are made.