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3 mistakes you could make if you try to collect debts yourself

On Behalf of | Apr 6, 2021 | Collection

When your business lends money to someone or extends credit to individuals for purchases or services, there is always the risk that someone won’t repay what they owe you. Hiring an outside collection firm can seem like an expensive solution, so you might feel like keeping the process in-house is your best option.

Unfortunately, having an administrative assistant or other non-specialized professional engagement collections could lead to legal and even financial consequences for your company. There are many rules about how you can collect a debt, and multiple ways for one of your staff members to potentially violate federal debt collection law, like the three common issues listed below.

Someone could call outside of the acceptable times

As a general rule, business activity occurs during the day. Unless someone notifies you about a work schedule that makes daytime calls disruptive, your company can typically only try to contact someone between 8:00 a.m. and 9:00 p.m. If you call before or after those times, that could be a violation of the debtor’s rights.

One of your employees could say something that they shouldn’t

The nature of the services that you provide and the kind of debt that’s owed you have will influence what privacy rights the other party has. Improper collection activity can violate someone’s privacy rights and possibly put your company in a vulnerable position — especially if there are medical implications.

The same goes for people attempting to skip trace by calling friends, family or neighbors. Sharing their private financial information with others could put your business in a precarious legal position.

A frustrated staff member could threaten or belittle the debtor

Federal law specifically prohibits threatening others as part of collection efforts. Whether an employee gets mad and threatens someone with physical harm or threatens to have someone arrested, aggressive words could potentially run afoul of the law.

You don’t necessarily have to contract with outside professionals to collect your debt, but you need to know about the legal implications for standard debt collection practices and any specific regulations for your industry. Accurate legal advice early in the process could save you from mistakes that could cost your company more than it could possibly recoup from the debt you’re trying to collect.