Have questions about debt collection in Aotearoa New Zealand? You’re in the right spot! We understand the process can feel overwhelming, so we’ve created this Debt Collection Frequently Asked Questions page to make things clearer.
Whether you’re curious about how debt collection works in New Zealand or want to know what to expect when working with us, you’ll find the answers here. Take a look, and if you still have questions, don’t hesitate to reach out, we’re here to help!
What is debt collection, and how does it work in New Zealand?
There are three stages of commercial debt collection.
The first is when a business approaches its debtors directly. This can be automated, or manual via calls and emails. It usually works most of the time.
The second is when a business engages the services of a third party to undertake debt collection on its behalf. The debt collection agency will approach the debtor through various means. A professional NZ debt collection agency like Sentinel has many resources to call on, and the experience to deal with the toughest debts. They are almost always successful.
The final, and least desirable of debt recovery services is legal action. This is the last resort and should only be used if the likelihood of collection is still potentially possible. There are usually large legal costs involved.
When should I contact a debt collection agency?
Generally, after you have completed your internal collection activities. But as a rule not more than two “payment cycles”. e.g. if an invoice is due on the 20th of February, you should consider engaging a business debt collection agency agency on the 21st of March. This depends on your relationship with the debtor, and their previous trading history.
How do I know if a debt is collectable?
New Zealand collections have a limit of five years from the date the debt became overdue, the last partial payment received, or the last written acknowledgement from the debtor that they know they owe money. Until that expiry, all debt is considered collectable.
How long does the debt collection process take?
This is a common question, unfortunately, there is no clear-cut answer. Sentinel has had payments received within hours of our first contact with debtors, and at other times it has taken over a year. The majority of debts are collected within thirty days.
Can you help with both personal and business debts?
Sentinel only engages in commercial debt recovery. There are however many consumer debt collection companies New Zealand based.
What are the costs involved in hiring a debt collection agency?
As we specialise in small business debt recovery, Sentinel does not charge clients any fees for the use of our debt recovery services. You can find out more about our free business debt recovery services here.
Will I need to go to court to recover my debt?
Most of the time, no. Unless the amount owed is large, and the debtor is not cooperating, court is not something that should be of concern. If it does happen, it will be at your sole discretion.
In the event of proceeding to court, and Sentinel has been acting as your debt collector and the process reaches the point of requiring legal action, we will provide you with a detailed report of our activities and any relevant correspondence with the debtor to provide to your solicitor. We are also happy to work with your solicitor on an affidavit if requested.
What happens if the debtor is in financial hardship or bankruptcy?
There are two parts to this question. When a debtor is in financial hardship, Sentinel will work with them to come up with an appropriate and affordable payment plan. We will then get a sign-off from you, the creditor.
If the debtor is going bankrupt, unfortunately, the process gets quite complicated. Too complicated for a FAQ.
What legal rights do I have as a creditor in New Zealand?
There are several protections for creditors in NZ. However debt collection in New Zealand is governed by the Fair Trading Act 1986, the Privacy Act 2020, and other laws. As a New Zealand debt collection agency, Sentinel follows ethical and legal practices as outlined by Consumer Protection NZ.
Can you collect debts from overseas or only within New Zealand?
As a NZ debt collection agency, we investigated how to collect debt effectively from overseas. However, it was decided we would only focus on New Zealand collections.
How do you protect my business’s reputation during the debt collection process?
Sentinel is a debt collection agency in New Zealand committed to upholding ethical and legal standards, in full compliance with the guidelines set by Consumer Protection NZ. We work ethically and professionally, treating all debtors with empathy and respect. As your partner, we treat your reputation very seriously.
Why choose Sentinel as your Debt Collector?
Sentinel has been undertaking New Zealand collections for more than a decade. We follow a professional and ethical approach to debt recovery services. Although there are many debt collection companies, New Zealand is a country of small businesses, and Sentinel is very experienced in small business debt recovery. There is also no cost to using our debt collection services.
Final Thoughts on Debt Collection Frequently Asked Questions
We hope that the FAQ we have put together has been helpful. As new common questions arise, we’ll add those too. In the meantime, if you have further questions, reach out to us and we’ll do our best to answer within a couple of days.