Debt recovery is significant for regulating finances in society, especially where lending and borrowing are standard. Secured debt recovery can be made by involving a debt collector. A debt collector is the best guidance for offering debt recovery solutions.
Covid-19 And How it has impacted debt collection?
Covid-19 was declared as a pandemic in March 2020 by the World Health Organization. The spread of this virus has impacted the economy throughout the world. Every profession has shifted to an online mode of conduct.
Similarly is the case with recovery debt collection. Although the suspensions announced by the court are temporary and a part of the government’s measures in tackling Covid-19, it will significantly impact the efficacy of debt recovery options that are available to creditors in the short term.
Concerns of creditors
Payment default rates are bound to go up owing to the prevailing pandemic. The creditors should plan on short-term as well as long-term measures on protecting their position. Every creditor should know the current practical options and apply careful thought to every recovery approach.
As the Covid-19 circumstances have existed for some time, the whole functioning of the world has changed considerably. Many have found it hard to adjust, and some are still struggling and molding into the new shape of the digitalized world.
In this article, I am going to talk about the operating status of the U.A.E court system. I will let the readers know about the consideration that a creditor should have in recovering his debt. Though the whole debt recovery procedure is delayed due to the pandemic, an intelligent strategy can still ensure fast debt recovery.
Suspension of execution and slow-down in courts
Initially, the creditors used to progress and seek a legal course in non-payment of debt through the U.A.E courts & other courts Around the Globe. However, this pandemic has changed the entire duration of things for creditors all around the world.
Pandemic Did Slow Down the Court Proceedings at a time, This also includes all the civil court hearings for the first few starting weeks of the suspension period. Though debt recovery can still proceed, debt recovery solutions have narrowed down.
Lawyers in Dubai
Before the pandemic stuck, THE UAE government was already moving towards the Electronic courts and documentation, which helped them in recovery after the pandemic hit, and the lawyers in UAE and courts in UAE all were already ready to handle the situation and work remotely.
The Courts never went under the full-lockdown mode. Their core functions were still being carried out electronically. The only thing the creditor has to worry about is the impact on the practical utility of the legal process to procure recovery of debts.
Fast Debt Recovery- A Thing of the past
At first, this was achieved by putting legal pressure on the debtors, especially the execution measures. Due to the high prevalence of Covid-19 in the Middle East, the legal process cannot be carried out physically for a short time.
There is a high possibility that the lockdowns can be extended due to the delta variant wreaking havoc in other parts of the world. This can open the option of shut down mode, and it might take longer than expected for the landscape to become normal.
Covid-19 was labeled as a “black swan” by one insurance industry publication. It was specifically used for the trade credit insurance market and about the influx of payment defaults and insolvencies that were to be anticipated in the coming months and weeks.
The notification of non-payment has already soared high. As a result of current events, it can be expected that many businesses all over U.A.E will lose their footing in the market and will slip into bankruptcy. Those who will survive can do this by defaulting or deferring on the payment of debts.
Complications Regarding debt recovery solutions
Debt recovery solutions have become harder for the creditors to apply. The risk has increased for the debtor as well as the creditor alike. Uninsured creditors have significantly been affected by the pandemic economic crises and found no ways of making a secured debt recovery.
There is a long list of issues that are being faced by the creditor these days:
- Challenging decisions regarding how and when to approach debtors for payment
- How to press for an early payment
- Whether to lend money or not for investments in businesses
- How to arrange a visit with the debtor when everything is in lockdown mode.
A few creditors have the patience level of adjusting to the fact that debt recovery in this pandemic will be:
- Harder than expected
- It Will take longer than usual
- Will be subjected to new policies
- New terms and conditions will be applied
- Civil litigation will be delayed
- Resorting to the online mode of approaching debtors
Debt collection was an excellent strategic legal process, but it has entirely been disrupted due to pandemics. Things have started to move back to normal, but still, much work needs to be done in online systems to ensure a secured debt recovery efficiency.