What term refers to the process of taking legal action to recover debts?

The correct term that refers to the process of taking legal action to recover debts is litigation. This term encompasses the formal process of pursuing a legal case in court, where a creditor can file a lawsuit against a debtor to seek payment of outstanding debts. The litigation process involves multiple steps, including filing complaints, serving summons, conducting discovery, and ultimately leading to a court trial or settlement.

In the context of revenue cycle management, understanding litigation is crucial as it represents one of the potential avenues for resolving uncollected debts. Organizations may resort to litigation when other methods of debt recovery, such as negotiation or mediation, have failed to result in repayment.

Mediation, negotiation, and arbitration are alternative dispute resolution methods, but they do not involve formal legal proceedings in court. Mediation involves a neutral third party facilitating discussions to help the disputing parties reach a settled agreement, while negotiation is a direct discussion between the involved parties to reach a mutual agreement. Arbitration, on the other hand, is a process where a neutral third party makes a binding decision based on the evidence presented. None of these methods involve the legal actions that characterize litigation.