Friday, June 8, 2012

Debtors Background Check

A debtor’s background check is one of the wisest things for a money lender to do for the purpose of assurance and status check. This will give the money lenders an idea of the capacity of the debtor to pay the amount that they lend. Money lenders take the risk in this business because as far as law is concern there is no direct case of imprisonment on debts. Banks and other macro and micro lending companies have SOP for doing loaner’s background investigation and pre-approval screenings. But in spite of it there are still failures of debtors to pay.

Property confiscation is one of the resolutions that money lenders do in cases of long due unpaid loans. Lenders may also ask for collateral as a guarantee for the amount borrowed – that is more considerable and light for the lender’s part.

The capacity of the person to apply for a loan depends on their income. Sometimes, debtors are asked for a guarantor. If the loaner has a business, there is a greater chance for the loan to be approved having an evidence of a source of income.

Assessing of assets also gives a debtor more chances if getting a loan approval. Assessment and investigation are crucial processes that banks and lending companies do for business security. This process is always part of their accounts. Aside from debtor assessment prior to loan approval, investigation is also needed whenever a debtor runs away from their obligation to pay their debt. 

Companies may hire agents that collect the amount directly to the client. If worse comes to worst, the lending party may do a legal action that will induce the debtors to settling their accounts. Money lenders can be at advantage if the debtor knows how to handle or use the money that they borrow – on the other hand, if mishandled; it can bury a person into a worse situation prior to having debts.

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