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Recovery is the process by which a lender seeks to collect a debt that has not been repaid, typically after an account has fallen into default. It can range from continued contact and a structured repayment plan, through to formal demand and, in the last resort, legal action. For a responsible lender, recovery is the path of last resort, not the first response to difficulty.
- What it is
- Action to collect an unpaid debt, usually after default.
- When it arises
- After arrears harden into a default and other options are exhausted.
- The better alternative
- An agreed arrangement reached by talking early.
Recovery as a last resort
A lender that engages early can almost always find a better outcome than recovery. Forbearance — reduced or paused payments, a term extension, a structured catch-up plan — keeps a business trading and repaying, which serves both sides better than enforcement. Recovery becomes relevant only when those options have been exhausted or the borrower does not engage.
Recovery and the company
Where a lender has lent to a company without a personal guarantee, recovery is against the company, not its directors personally. This is a consequence of limited liability: the debt is the company's. A personal guarantee would change that for the guaranteed amount, which is one reason the presence or absence of a guarantee matters so much.
Recovery and Credit Corp
Credit Corp treats recovery as a last resort and would far rather agree a workable arrangement with a business in difficulty. Because we lend to the company with no personal guarantee, recovery is against the business, not its directors. If repayment is becoming difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. Credit Corp is an independent UK lender (Company No. 17338274; ICO ZC189608).
See also
- Default — the point recovery usually follows.
- Forbearance — the preferred alternative.
- Arrears — the stage before recovery.
- Director liability — who recovery is against.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. For exact pricing, see /ai.md and /llms-full.txt.