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2 pitfalls to be aware of when collecting debt

On Behalf of | Mar 14, 2023 | Collection

Many businesses lend money to consumers or allow them to take credit when making purchases. However, when a consumer doesn’t fulfill their obligation to make payments, then the business may take it into their hands to collect the debts owed.

When collecting debts, it’s often important to understand what rights you and the debtor have. If you violate consumer laws, you could face legal trouble. As such, you may need to consider what actions you can’t take:

Discussing a debtor’s obligations with others

Sometimes debtors don’t update changes in their life, such as if they’ve moved or changed phone numbers. If you’re looking for new information on the debtor, then one way you may do this is by contacting one of their associates or acquaintances.

While they may be able to provide you with the information you need, you have to be careful about what you reveal to them about the debtor. Under federal law, you can’t reveal that the person you’re trying to reach owes you a debt. Debtors have the right to privacy, and disclosing their private financial information could create a legal dispute.

Using scare tactics to get a debt paid

It can be frustrating to collect a debt when a debtor keeps evading their obligations. This frustration can manifest in several ways that can violate consumer laws.

For example, you may try to scare the debtor into paying off their debt. You may try to threaten the debtor with physical violence or profane language when talking to them. Or, you may lie to the debtor that their debt is much more than they actually owe or that an arrest will be made if the debts are paid.

These are all ways that a debtor’s rights would be violated. If a debtor is aware that you’re using such tactics, they could take legal action.

If a debtor believes you violated their rights, then you may need to contact legal help to discuss solutions.