If a customer owes your local business money, it's hard not to feel angry,
like you want to do anything possible to get your money back. But the days of
going all out to collect on a debt over.
The Fair Debt Collection
Practices Act, designed to protect consumers from harassment or intimidation,
sets firm limits on what you can do to collect a debt from a consumer. The
federal debt collections law even prohibits practices that were once standard,
and that you might not consider harassment at all.
Besides, as a local
business, you have an even more powerful reason to be especially careful about
legal debt collection issues. You have something much more valuable at stake
than a lawsuit: your business's reputation in the community.
Legal Debt
Collection Best Practices:
There are plenty of articles on the web that
lay out in plain English what the Fair Debt Collections Practices Act says you
can and cannot do. Just to give you some idea of the law's requirements, here
are some of the biggest:
- No telling any third party about the debt
(except collection bureaus, collection agencies, or the debtor's
attorney).
- No calling on the telephone 9 pm - 8 am, or calling
repeatedly in a way that is annoying.
- No postcards or envelopes that
mention the debt.
- No threats to take actions you cannot or will not
really take, such as seizing property, in the case of an unsecured
debt.
- No misrepresenting yourself (e.g., "Hi! This is the Publisher's
Clearinghouse Sweepstakes. May I speak to John?").
- No paying down the
debt with payments the customer has directed be applied to other
debts
Tips and Tricks for Legal Debt Collections:
With all these
limits on what you can do to collect a debt, what can you do legally?
-
Speak with the debtor personally on the telephone; most likely he or she wants
to pay but is in over his or her head. Begin by asking what circumstance has
kept him or her from paying. Offer to set up a repayment plan.
- You
should both send letters and make telephone calls. Many people will only respond
to one or the other.
- Document every part of the collections process.
Take notes for each call and keep a copy of each letter. If the debt does ever
go to court, you will have proof you acted legally.
- Look into reporting
the debt to credit bureaus. If you can, and are willing to do it, you can tell
the debtor that not paying will impact his credit rating.
- Best tip of
all: hand over the job to a dedicated collection agency. Small business debt
collection services start at as little as $20 per debt. The fight to get paid is
a fight no business should have to involve itself in.
Unfortunately, debt
collections are a part of business. Just make sure that for your local business
debt collection law is followed to the letter, or legal proceedings may become
part of your business, too.
About the Author
Free debt
collection laws information at http://www.debt-collection-laws.com/
