Debt collection remains a highly regulated industry. Individuals and companies find they may get into trouble as a result. They believe they are adhering to all rules and regulations only to find they were wrong when they receive a big fine. What must a person know when they attempt to collect accounts that have gone past due? 

Obtain Help From Professionals

Although a business owner might believe they can collect the debt themselves without outside help, doing so becomes costly in many cases. For instance, a company may hold on to a delinquent account longer than it should. When this is the case, they find they cannot collect as much. Furthermore, they lack the tools needed to successfully pursue debtors and lose money as a result. 

For example, most companies don’t employ skip tracers. These individuals know how to locate an individual who has skipped out on a debt so they can be held accountable for the funds due to the company. These individuals become of great help when a debtor refuses to speak to the company regardless of how they are contacted. 

In addition, these individuals know the laws of the state. They ensure the company doesn’t violate a law unintentionally. For example, a company may need a debt collection attorney to be certain they don’t run afoul of the Sarbanes-Oxley Act. The attorney helps them show the self-compliant accounting framework and controls required by this law. 

Plan Ahead

Companies must have a plan in place if a customer doesn’t pay as agreed. Although a business owner hopes this never happens, it can and does regardless of the business’ size. Any credit agreement or application should include a provision that states the client will be responsible for any attorney fees if the client doesn’t pay as agreed along with late charges and interest at the highest rate allowed by the state. Having this document available eases the litigation process if the case makes it that far. 

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Furthermore, know who will be responsible for contacting the debtor as the process moves forward. Every contact with a debtor must be documented because the debtor may admit they are liable for the amount due. If the customer states something that is inaccurate, the business can then respond by outlining the reasons for the dispute. 

No Threats or Harassment

Avoid threatening or harassing debtors. The Fair Debt Collection Practices Act forbids creditors from taking these steps in an effort to protect debtors from unfair, deceptive, or abusive debt collectors. However, this act only protects consumer debtors. Commercial debtors lack the same protections under federal law. The same may not be true of state law. 

Turn to litigation when a debtor fails to pay as agreed. When doing so, determine whether it is profitable to file a lawsuit. Determine what the debtor owes to other individuals and whether the company will be able to collect on the debt if the lawsuit goes in their favor. At times, a company will find they can never recoup the funds because the debtor already owes too much and those debts will be prioritized. 

Business owners need to act quickly when a debtor fails to pay as agreed. The odds of recouping the funds diminish greatly the longer the unpaid account remains open. Contact an attorney as soon as a debtor gets behind on their account and refuses to respond to communications from the company. Quick action becomes of great help in ensuring the creditor receives the funds they are due. 


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