Collection Agencies

Written by: Pam Gaulin

Collection services employ similar debt collection strategies across the board. There are legal and ethical considerations when collecting money on past-due accounts. It's important to understand what's legal and what's not important for small business owners. By requesting information from numerous debt collection services you can discover the different strategies and techniques that each firm uses to collect money on past-due accounts.

Legal debt collection practices and calls

Collection services contact debtors by sending official letters and making phone calls. Less common, but equally legal ways to contact debtors are to visit them in person or to send them a fax or registered letter requesting immediate payment. Some services use specific schedules of when and how often they send out letters regarding past-due accounts. As time progresses, the letters may become more stern and firm but can never appear threatening or invasive.

Collection agencies may place phone calls to debtors regarding past-due accounts but only within certain time frames. By law, agencies can't contact a debtor at inconvenient times (typically before 8 a.m. or after 9 p.m.), unless the debtor specifically waives that right.

Agencies may call debtors at home or at work. However, once collectors are told they can't call current places of employment anymore, they must cease immediately.

Language used on the phone may be strong and request a payment commitment from the debtor as long as the debt collectors refrain from using profane or abusive language. Debt collectors are also not allowed to threaten the debtor with arrest or physical violence.

It's also prohibited for debt collectors to be deceptive. A debt collector must identify himself as such, and can't pretend he is an attorney or that he represents a government agency. Simply put, the collector must provide his name, reason for calling, and a solution for rectifying the problem.

Collectors must also respect debtors' rights to privacy. Collection agencies can't threaten to disclose any debt information with the debtor's employer or any other parties. They can, however, ask a third party about your current contact information and place of employment. Keep in mind that the third party is under no obligation to share that information.

Follow up by letter

After the first collection request by phone, the collection agency must send the debtor a letter outlining how much is owed, who its owed to, and when it must be paid. The letter must also detail how the debtor can dispute elements of the claim. Collection agencies usually have templated letters available for any situation, and can customize letters for atypical circumstances.

Finding professional debt collectors

Certain collection tactics are unprofessional at best and illegal at worst. As a small business owner, you should steer clear of collection agencies that allude to condoning any illegal practices. When you request free collection agency price quotes from BuyerZone, research every collection agency to ensure they are compliant with the law. Evaluate each company that you're matched to and learn what their approaches are to effectively collecting on past due accounts.

The collection agency should have transparent debt collection procedures for dealing with debtors. Because these debtors may be long-time customers of your business, it's important to work with agencies that are willing to share their best collection strategies with you.

Keep your business on the right side of professionalism and law. If navigating through the legal and illegal debt collection strategies is overwhelming, you can outsource the job to an ethical agency with experience.