Insolvency practitioner vs. Debt Collector: What's the Difference?

What is the difference between an insolvency practitioner and a debt collector?

The main difference between the two is that debt collection agencies are tailored towards dealing with smaller value, volume claims compared to insolvency practitioners who deal with larger sums owed to a business.

There are three stages to debt collection with an agency:

1. A letter is sent to the indebted individual stating the amount of the outstanding debt and reserving the right for court action.
2. If the payment isn't made then a claim form can be filed with court.
3. If the debt is still not paid, then a judgement can be issued and an application for enforcement is made.

The third stage is where an insolvency practitioner (IP) becomes involved. The IP will work on behalf of creditors to turn assets into cash and distribute this to creditors in a specific order based on legislation. The IP can also investigate the history of the debtor to determine if assets have been hidden to prevent them being realised.

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