Imagine being a business owner struggling to collect unpaid bills from dead-beat customers. You spend months sending invoices and reminders. You even make a few feeble attempts to contact the customers by phone. You ultimately give serious consideration to sending the debts to collection. But your attorney recommends civil lawsuits instead. Why?
Sometimes a civil lawsuit is the only way to get paid. The issue for so many business owners is having to comply with federal regulations put in place to protect debtors from abusive collection practices. But the laws are skewed in favor of debtors to the extent that sending unpaid bills to collection often is not worth it. A lawsuit might be the only way to move forward.
Fair Debt Collection Practices
The Fair Debt Collection Practices Act (FDCPA) is the primary means of protection against abusive collection practices. It applies to debt collectors, attorneys, and debt buyers. The regulations cover standard household debt but not business debt.
With this protection in mind, a business needs to think long and hard before sending debts to a collection agency. There are four specific limits placed on collection agencies, three of which go too far to make collection efforts reasonably doable.
1. Time and Place for Contact
Debt collectors are not allowed to contact debtors at unusual times or in unusual places. Furthermore, they are not allowed to make contact at a time that is inconvenient for the debtor. This generally means that contact can only be made between 8am and 9pm.
Debt collectors are not allowed to call debtors at work if they know that debtors are prohibited from taking personal calls. If they call and a debtor says the time is inconvenient, the debt collector must immediately terminate the call.
2. Electronic Communications
Next, debt collectors cannot use publicly accessible electronic means to contact debtors. For example, they can use private messaging within a social media platform, but they cannot post notices on publicly available pages. In addition, while debt collectors can use email and texting to make contact, they must give debtors a way to opt out from such contacts.
3. Attorney Representation
Once a debt collector learns that a debtor has retained legal representation, all contacts must then be through the debtor’s attorney. That means the debt collector can no longer contact the debtor directly.
4. No Harassment
In no way can a debt collector harass debtors – or anyone else they might contact in pursuit of an outstanding debt. Debt collectors may not harass over the phone, via email, or by any other means.
Limited Contact Makes Collection Impossible
Preventing harassment is a no brainer. It is easy to agree with that rule. But the other three unnecessarily limit contact and, subsequently, make collection nearly impossible when dealing with a debtor who knows how to play the system. This is what leads so many creditors to pursue civil lawsuits.
With a civil judgment in hand, a judgment creditor can utilize the services of an agency like Salt Lake City based Judgment Collectors. The FDCPA still applies, but the creditor and collection agency have access to stronger tools including wage garnishment and property seizure. Limited contact is not so much of a problem due to the strength of these additional tools.
Sending consumer debt to collection is an option. But it is not a particularly good one. Sometimes, businesses struggling to collect unpaid bills are better off taking debtors to court in hopes of obtaining judgments. A judgment adds teeth to collection efforts by offering tools that go above and beyond what standard collection allows.