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Many businesses are losing money from
non paying customers. You need to know how to collect debt the right way without
getting in trouble with the Federal Trade Commission. Companies must comply with
the Federal Trade Commission Act and with the Fair Debt Collection Practices
Act.
With these laws it makes it illegal to use
unfair or deceptive practices in order to collect debt. Many states have their
own laws on how you can collect debt, so make sure you check out your local
governing office for information, before you try and collect a debt. You should
also look into talking with an attorney for consultation or you can hire someone
who knows about debt collection to collect the debt for you.
If you don't follow the rules, you can put
your business in jeopardy. A debtor can come around and sue you for libel or
harassment, you can end up losing more then you were owed.
If you conduct business in the U.S.A
you can not do any of the following:
1. You can not pretend to be someone else,
such as a law enforcement agency or official, or attorney. You can not use a
fake identity on a letterhead.
2. You can not send out a collection
letter that looks like it came from court or create documents that looks like
its official court summons. Your collection letters should appear to be like a
regular business letter, you can state that you are letting the receiver know
that you are attempting to collect an over due account. They must not
appear to look like you got an approval from an attorney or a government agency.
3. You try to collect or act like you have
a right to collect any fees is illegal. Fees such as attorney fees, court costs,
or any other fees cannot be collected unless you know you can justify collecting
such fees. In your contract you must state all of your penalties that you charge
for late payment, if you fail to list these fees you can not collect these fees.
4. You cannot do any of the following
unless you are going to follow through with it.
a. Threaten to turn over an account over
to a collection agency.
b. Threaten to take legal action.
5. There are times when you are allowed to
make collections calls which is calling after 8 am or before 9pm is ok, but you
must not make repeated phone calls or you call to early or to late. If you do it
can be considered harassment.
6. You can not attempt to ruin a debtor's
reputation by letting others know that they owe you money. Which includes
sending collection letters, notices on postcards, that anyone can read. You
cannot put anything on the outside of an envelope that suggests it is a
collection notice. You can not tell anyone or even threaten to tell anyone
else the essence of the debt, to a debtor's employer, before you obtain a final
judgment against said debtor.
7. Last but certainly not least you can
use intimidation to collect a debt, such as threaten violence, use abusive
language, go visit a debtor, or refuse to leave their premises.
Once again check out your local laws to
see what is an acceptable way of collecting a debt, make sure you follow the
rules above as well as the rules associated with your state. Failure to do so
can get you in big trouble, and possibly lose your business. When in doubt
consult with someone who is knowledgeable with collecting debt.
Jen W
About the author: Jen W is a work at home
mother of 3 beautiful children she is also the owner of
New Wave Design Virtual Assistant
Services and Website Design. Jen also owns several businesses such as
J and J Consignment Shop,
New Wave Graphics and of course
The Informer.
Notice: You are free to use these articles
that Jen writes as long as you maintain all parts of the article including the
bio and this notice. Copyright 2005 all rights reserved! | 
