February 22, 2011
Understand How These Debt Collection Laws Influence Recovering Your Business Bad Debt Successfully
When it comes to trying to recover unpaid accounts from your debtors, the myriad of debt collection laws can sometimes feel as though they’re getting in the way. Obviously your main goal is to try and encourage as many late-paying account holders as possible to pay their debts and help keep your business’ cash flow strong.
Reaching Your Customers – Do you know what the parameters are when it comes to trying to contact your customers? The Fair Debt Collection Practices Act regulates and protects debtors from certain kinds of communications from creditors.
For example, there are limitations placed on the times during the day, as well as weekend, when you can contact debtors. There are also limits governing where you can and cannot contact delinquent customers about their past due accounts. Make sure you understand and operate within these legal prescriptions.
If for some reason you need to contact a third party to try and reach the original debtor, then you’re also restricted to only asking for information concerning the best ways to reach the actual debtor.
Disputes About Ownership Of The Debt – Sometimes a debtor may deny owing your business any money at all. If this happens then you are obliged to send written verification of the outstanding debt that includes clear payment instructions.
Truthful and Accurate Information – The law requires that you provide debtors with truthful and accurate information. For example, it is a violation to intimate or threaten arresting debtors for delinquent accounts. You can’t represent that you have legal representation, if in fact, you do not. You also cannot insinuate that debtors will be chased after by any governmental authority.
You’re allowed to give only accurate information concerning the debt, and all of your collection strategies must be in accordance of debt collection agency laws at all times. Should you violate these laws, you could be sued by your debtor(s). They could also collect up to 1 percent of the collector’s net worth.
Clearly, its very important that your business fully understand these debt collection laws as they relate to your collection strategies. Collection agency laws go beyond simply getting customers to pay their past due debts.
You may also need to learn how the changes to the Fair Debt Collection Act may relate to customer access to credit reporting information. They may wish to verify the information listed on their credit report, so you need to be sure the information you provide is always accurate. Business owners that don’t adhere to these laws may face some steep fines and they may even find that the debt owed to them could be discharged.
Sometimes debt collection can be a difficult process, but as long as you understand the debt collection laws or the collection agency laws and how they can affect which actions you need to take to recoup money owed to you then you may find it’s not as difficult as it sounds.
Learning about the things you are allowed to do legally can also help you to build debt collection strategies that means you’re able to contact your debtor properly and collect on the debt owed to you.
David P. Montana has been a prominent enterprise veteran, business consultant as well as journalist with regard to collection agencies providers for 30 years. He offers additional valuable strategies and knowledge about debt collection laws.
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