Debt Recovery Mediation

Debt Recovery Mediation

Debt Recovery Mediation is a process in which a neutral third party, known as a mediator, assists creditors and debtors in resolving disputes related to unpaid debts outside of court. This method aims to facilitate communication between the parties, helping them to negotiate a mutually acceptable solution.

The process typically begins when a creditor seeks to recover an unpaid debt. Instead of pursuing litigation, the creditor may suggest mediation as a more cost-effective and less adversarial alternative. The mediator organizes a meeting where both the creditor and debtor can present their perspectives and issues concerning the debt.

During the mediation sessions, the mediator encourages open dialogue and helps identify common interests. The mediator does not make decisions for the parties or impose solutions; instead, they guide the conversation to help the parties develop their own agreements. Possible outcomes of debt recovery mediation may include payment plans, partial debt forgiveness, or a structured settlement.

For example, if a small business is unable to pay a supplier, both parties can agree to mediation. Through this process, they may negotiate a payment plan that allows the business to pay off the debt in installments while ensuring the supplier receives compensation over time. This approach preserves the business relationship and avoids the uncertainties and expenses of court litigation.