Unfortunately, there will be times in which a person has to collect money, because the customer doesn’t want to pay an outstanding debt. This will happen in a few situations. For example, some business owners allow their customers to pay by check. A customer might write a bad check.

As such, the business will have to find a way to collect the money that should have been paid out with the check. Or, a customer might have an outstanding invoice that needs to be paid. Many business owners might allow 60-90 days for a payment on the invoice to take place. However, if the customer doesn’t pay on the outstanding invoice, the company will be out of money, and the debt will have to be paid.

In situations like these, it’s a good idea for a business owner to seek out the services of a collection attorney. A collection attorney not only knows how to prosecute the outstanding debtor, but they have tools at their disposal to help track down avenues of money to help pay off the debt.

For instance, if a company has a debtor who can’t or won’t pay their bill, what happens? With an attorney, they can file suit against the debtor, and they can forward details about the outstanding debt to credit reporting agencies. So, if a customer passes a bad check, the lawyer can work with the bank, forward information to the district attorney and work towards a resolution of the issue even if it means criminal prosecution needs to happen.

Using an attorney is better than using a collection agency, because there is no guarantee that the collection agency will get their money. On the other hand an attorney has many avenues to make sure that you can get your money back that is outstanding. They have the power of the law behind them.

Other advantages available to an attorney include the ability to approach the person owing the money in a professional manner. A lot of collection agencies are abusive and persecutory causing them to spend more time defending their business than collection owed funds. Collection agencies don’t have trained personnel which has led to a conglomeration of horror stories from people who’ve been the recipient of their abuse.

Many companies looking to collect monies owed will turn to a collection attorney rather than a collection agency to reach a satisfactory conclusion.

If you’re owed money, consider hiring a collection attorney to help you recover your money. Debt collection attorneys typically only charge a fee when they recover the money you’re owed.

The Fair Credit Reporting Act affects every business. It is the means by which the FTC requires businesses to report only accurate information regarding the debts owed to the company by a debtor. Every business owner handling in house collections needs to fully understand The Fair Credit Reporting Act.

Organizations that fail to adhere to these laws might be risking costly fines. And in some cases, debts owed to them could be discharged. Debt collection is a difficult process. However, it is very important for any business handling debt collections to fully understand the law.

The Fair Credit Reporting Act Explained

The Fair Credit Reporting Act states that consumers have rights concerning the accuracy of credit information about them contained in their credit report. It also states that businesses are responsible for the accuracy of the information contained in these reports to the best of their ability. It is important that businesses understand how this impacts debt collection.

In the event your business receives a complaint from one of the credit bureaus (TransUnion, Experian or Equifax), you then have a 30-day period to verify that the debt owed is valid, or it has to be removed from the individual’s credit report, according to The Fair Credit Reporting Act.

In regards to debt collection, The Fair Credit Reporting Act is crucial to understand. If you file an inaccurate claim, you face possible legal ramifications if done so intentionally. Moreover, The FTC can possibly limit your abilities to file future claims.

The Fair Credit Reporting Act works to the benefit of your business as well. As long as information about the debt is reported correctly, it should be used by the business to make sure other businesses know of this individual’s failure to pay their debt. Other businesses will certainly want to know what to expect from a potential customer before working with them.

Important Facts

For any businesses or associates handling debt collection, there is much to know about the Fair Credit Reporting Act. Businesses that supply information to the consumer reporting agencies are responsible for submitting only accurate information. The law was updated to expand the rights of the consumer.

Consumers are able to learn what is on their credit report by filing a request with the credit reporting agencies. And, during that process, if there is any information deemed inaccurate, including missing account information, debt collection activity, or inaccurate history, the business must show proof of the accuracy of the debt or it is removed from the report. The Fair Credit Reporting Act puts the burden of proof on the business claiming the debt is owed.

Negative information on these consumer reports can remain for up to seven years. Bankruptcies are an exception, in that they will remain for ten years. Criminal convictions, information reported in response to an application for a job with a salary that is higher than $75,000 or any information in regards to an application of more than $150,000 can remain for the lifetime on the report. Understanding the requirements of the business to file only accurate information due to the Fair Credit Reporting Act is critical for any business owner, noting debt collection or other requirements.

Also, explore more important facts and resources on debt collection laws, in addition to collection agencies options.

In the last article of this series I described two different sorts of collection agents: in house collectors and third party collectors. In house collectors work directly for the creditor, while third party collectors work for a collection agency hired by the creditor to collect on delinquent accounts. I mentioned that third party debt collectors are bound by the rules and guidelines of the FDCPA, while in house collectors are not. The FDCPA stands for Fair Debt Collection Practices Acts and it is full of strict guidelines that third party collection agents must follow.

So, as you can imagine, many lawsuits spring up due to complications and confusions regarding collection agents and the regulations they have to follow: are they in house, or third party? Last article I brought up three examples, one being the Department of Education collecting on student loans. Anyone who works directly for the Department of Ed is not bound by the FDCPA, while the seventeen private third party collection agencies that it works with are. I described a law suit about a hospital that sent out pre-collection notices to patients with medical debts. If the hospital was ruled a third party collector, everyone who received that notice would have been absolved of their debt. In this case the hospital was ruled a creditor instead.

Finally, I brought up a personal situation I encountered with an in house collection agent that is sort of amusing and ridiculous but pertinent nonetheless. I am infamous for taking out books from my local library and never giving them back, so last summer it got to the point that they sent a debt collector after me! The debt collector called my third party house phone and left a message for everyone to hear about the intimate details of my “delinquent account,” and ask that either I return the books or pay the library for the cost of them. Fortunately for them, I love my library and was also aware of the fact that the collector was an in house, because she requested that I pay the creditor (the library) directly. I gave the books back, but let it be known that if I did not manage my finances as well as I do now, and had been called by a rude third party debt collector who did the same thing; there would have been hell to pay.

To determine if they are work with third party debt collectors or in house collectors in court cases, the courts will take a lot of ideas into consideration to rule if the FDCPA applies or not. If the creditor hired a collection agency outside of its company, the agency’s participation in the actual debt collection process must be minuscule. Questions the court will ask include: is the collection agency only a mailing service? Do they letters say if the debtor does not pay the debt will be referred for collection? (Third party collection agencies send out different letters, in house collectors send out these “warning” letters.) Is the collection agency only paid for sending letters?

If the collection agency is paid on commission, it is most likely a third party collection company. Again, if the agency receives the payments and then forwards payments to the creditor itself, it is most likely a third party collection agency. If a debtor does not respond to the letter and the collection agency has no further contact with the debtor, or if it does not get a hold of the files on the debtors, it is most likely not a third party collection agency. The lesson to be learned here is that when it comes to personal finance, it is important to know who you are giving your money to. A simple question as to whether you are speaking with a third party debt collector or an in house collector can guide the conversation because you will know their limits, like in the case of me and the library, or all of those people in the hospital that might have gotten away with not paying their medical bills.

Mallory Megan works for Rapid Recovery Solution and writes articles on commercial collection agencies Check here for free reprint licence: The Difference Between In House And Third Party Debt Collectors And Why It Pays To Know Who You’re Paying Part Two.