debt collection

Debt Collectors Are Calling My Family — Now What?

Dan Rafter — Mon, 26 Nov 2018 18:28:01 +0000

It's bad enough when debt collectors start calling you, but what if they start hounding your family members, too? Can collection agencies legally do this?

The answer is a bit complicated.

The types of calls that debt collectors can make is regulated by the Federal Trade Commission's Fair Debt Collection Practices Act. This act provides protection to consumers who owe debts. It says, for instance, that debt collectors can't threaten you with jail time or call you early in the morning or late at night. The act also says that collectors can't call you multiple times a day. The act also regulates the communication that debt collectors can have with your family members. (See also: 5 Things Debt Collectors Don't Want You to Know)

Calling family members

Debt collectors are hired to get you to pay up the money you owe to their clients. To do this, they'll reach out to you by mail or phone to convince you to come up with the cash. But if debt collectors can't find you? Then they can contact your family members. In fact, they can contact anyone who knows you, including friends or co-workers.

However, what they can say to these third parties, and how often they can contact them, is extremely limited. The Fair Debt Collections Practices Act states that debt collectors can only contact family members, friends, or co-workers to find your location. If they have already contacted you, they are not allowed to reach out to others. They can also only contact family members or friends once.

What they can say

Debt collectors are also limited in what they can say to your family members. They must identify themselves and state that they are confirming your contact information or looking for correct contact information. If your family members ask, they are required to identify who is employing them, but only if they are expressly asked this question.

Debt collectors are not allowed to tell family members that you owe any debt. Collectors also can't threaten family members or call them more than once unless the debt collector reasonably believes that the family member's earlier responses were incorrect or incomplete, and that the person now has correct or complete info.

The Consumer Financial Protection Bureau says that debt collectors can't discuss your debt with anyone besides you, your spouse, or your attorney — if that attorney is representing you regarding your debt. If you're a minor, debt collectors can speak with your parents about your debt. They can also discuss your debt with your guardian, executor, or administrator, if you have them.

What to do if debt collectors aren't following the rules?

If debt collectors are violating the rules of the Fair Debt Collection Practices Act when they contact your family members, you should contact the Federal Trade Commission with your complaint. You can file a complaint online by using the commission's Complaint Assistant.

You can also contact the Consumer Financial Protection Bureau. You can file a complaint online with this this agency, too.

Additionally, you have the option of suing a debt collection agency in state court or small claims court. Be warned, though. You might have to hire an attorney to succeed, and this can be a time-consuming and frustrating challenge. (See also: Here's What Happens to an Account in Collections — Even When You Pay Up)

Like this article? Pin it!

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Ways To Negotiate Your Debt When Cash Flow Is Slow

Margie Fishman — Thu, 19 May 2011 23:43:20 +0000

Link:

http://www.openforum.com/idea-hub/topics/money/article/4-ways-to-negotiate-your-...

So, you’ve committed the cardinal sin of owning a business: Poor cash flow management. In this challenging economic environment, your debt-saddled customers are taking their sweet time paying their bills (when they pay at all), which translates into you falling behind on paying yours. You’re over-leveraged. There’s no more wiggle room.

Ignoring the problem and simply withholding payment can lead to a barrage of nasty phone calls and letters from a collection agency, since businesses aren’t protected from threats and harassment under the federal Fair Debt Collection Practices Act. Not to mention the seven-year ding to your credit report.

To avoid all of the above, get ahead of the problem and actively negotiate with your creditors to preserve vendor relationships and, ultimately, your business.

Confront the Numbers

Calculate your total business debt amount and analyze the bills to determine how much you can realistically pay. Make a list of your creditors by order of importance. (Which vendor would hurt your business the most by cutting you off? Which account is most past due and in danger of being reported to collections?) Start calling. Note: Settling debt is often not an option with secured debt, which is associated with a tangible piece of equipment or property that can be repossessed. By contrast, there is nothing attached to unsecured debt except a borrower's promise to repay.

Limit the Players Involved

A tete-a-tete only has room for two. Adding a debt settlement firm to the mix tacks on hefty fees while distancing your business from the supplier(s) owed payment. Direct communication is vital, especially if you want these people to work with you in the future. You want to make sure you're in constant communication to let the vendor know you are aware of the situation, and you're actively working on resolving it. Sometimes that is enough to delay turning your account over.

Make a Reasonable Offer

As with everything, timing is key. A vendor or creditor is unlikely to accept a reduced payment if an account does not yet appear as delinquent. Accounts in arrears for 90 to 120 days, however, can be turned over to collections. If paying in full is not achievable, request a “workout,” under which both parties agree to a reduced debt amount. Most vendors prefer lump sum payments. Some may be willing to agree to a lesser amount (as much as a 30% to 60% reduction off the original debt) repaid over a period of several months, particularly if they think the business is on the verge of declaring bankruptcy. Consider providing a promissory note, personal guaranty or collateral such as a lien against equipment. Explain your situation honestly (in person, rather than a quick email). Give specific dates on when you will make payments and honor them.

Create a Paper Trail

Always request documentation of the debt in question to verify that it belongs to the business. Keep careful notes of conversations with any vendor representatives. Finally, once you reach an agreement and before making payment, request a written copy of the terms, including a statement that the payment(s) to be made will completely fulfill the debt. If that is not feasible, record the conversation if you are in a state that only requires one party (you) to be aware of the recording.

By taking a proactive approach and communicating with vendors openly and honestly, you stack the odds in your favor for resolving the debt and engendering vendor loyalty.

This article is from Margie Fishman of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

It's Not Revenue If You Can't Collect It

Kate Lister — Thu, 03 Jun 2010 17:01:45 +0000

Link:

http://www.openforum.com/idea-hub/topics/money/article/its-not-revenue-if-you-ca...

There's nothing worse than having to chase down slow-paying customers. Oh wait, there is something worse: the ones who don't pay at all.

The best strategy for dealing with bad debt is to not let it go bad in the first place. Here are some tactics that will help.

1. Check their credit

At the very least, you should check a prospective customer's credit report and credit score. For small businesses, Dun & Bradstreet, Experian, or Equifax are the major reporting agencies. Among the three agencies, Dun & Bradstreet is the oldest and most established in the business market.

Depending on the size and age of the business, these reports will include information such as their bill payment history, whether there are any outstanding liens or judgments against them, the size and nature of their loans and credit lines, levels of credit extended to them by other companies, balance sheet and income statement data, and any recent payment trends. How they've paid their bills in the past is the best predictor of credit worthiness.

While sample reports are available on each of the agency web sites, it's important to note that not all credit reports are as thorough as the samples offered. Little to no information may be available on smaller and newer businesses.

If you're selling to individuals, the primary reporting agencies are Experian, Equifax, and TransUnion.

Since business life is anything but static, recheck your customers' credit on a regular basis or sign up for alerts that warn you when something changes.

It's worth noting that mistakes in credit reports are quite common, so unless you see a pattern of problems, you might want to question a potential customer if an item or two seems atypical. You should check your own credit reports regularly for this reason, too.

2. Require and check credit references

If you don't have a formal credit application, get one and use it for all customers who aren't on COD terms. A Google search on "sample business credit application" will offer many free templates.

But just having a prospective customer fill out the application isn't good enough. Be sure to request recent business credit references. Specify that none can be related to the applicant. Include a disclaimer that allows you to check with industry contacts other than those provided.

When you call their references, you'll want to confirm the prospect's credit limit, the vendor's payment terms, the general payment experience, how long they've worked with the prospect, and the date of the last sale.

If the reference doesn't want to talk, be suspicious.

A word from the lawyers: Have a local business attorney review your credit application and tell you what is and isn't legal to ask. This is especially important when dealing with individuals.

3. Establish and enforce credit limits

Decide what level of credit you're willing to extend based on what you learned from the credit report, the references, and your own level of financial comfort. Once they're set, enforce them.

4. Make your credit policies obvious

Make new customers aware of your credit policies and payment terms. Remind existing customers with a statement on each invoice. Establishing and enforcing your late payment penalties will let your customers know you're serious about being paid on time.

5. Tighten requirements on questionable customers

Small business lenders require personal guarantees and collateral. Why should you be an unsecured lender? If times get tough, the secured creditors are first in line (though the bank will no doubt be in front of you).

If all else fails, require cash on delivery.

6. Use accounts receivable (A/R) agings to continually monitor who owes you money

At least once a week, look at who's past due. The sooner you do something about it, the better chance you'll have of being paid. At the very least, give them a call. If it looks like a real problem, you may want to suspend their credit, require COD, or stop selling to them altogether.

7. The squeaky wheel gets greased

Small business owners are often illogical about who they pay when cash gets tight. The more constant the dialogue, the more likely you are to be paid.

8. Consider legal action

If all else fails, you may need to consider small claims court, a collection agency, or a full on lawsuit. Be sure to weigh the costs against the benefits of such actions. Even if you win, there may be nothing to collect. Sometimes, while you may be angry, it just isn't worth it. If that's the case, write it off — both figuratively and literally — and learn from the experience.

This article is from Kate Lister of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Laws the Leg-Breakers Don’t Want You to Know About

Linsey Knerl — Fri, 10 Aug 2007 21:02:36 +0000

Gone are the days when debt collectors only hassled the lazy, financially inept, or the completely downtrodden and hopelessly unlucky. More and more consumers are being contacted by debt collectors as part of an attempt to be paid for past due accounts, either for their own debt, debt inherited as a condition of a death in the family, or as a horrible consequence to an identity theft. Whether or not you actually owe the money, the rules are the same. Debt collectors acting as a third-party interest in past-due accounts are bound by the laws of the FDCPA. Learning what they can (and more importantly: CAN’T do) is vital to protecting your rights and preventing undue stress.

The Fair Debt Collection Practices Act , often referred to as the "FDCPA", was passed by Congress in response to abusive conduct by collection agencies. Actions that are considered illegal under the Act include:

Contacting a third-party not involved with the debt. This means that if your boyfriend’s name is on the debt, they can call him. They cannot, however, contact Aunt Edna. They also cannot call you at work if it has been made known to them that it is a violation of a work policy. Once you tell them that they cannot call you at work anymore, they need to comply.

Threatening to sue you, throw you in jail, garnish your wages, kill your dog, etc. They can inform you of an actual impending intention to refer your case to an attorney or to report your debt to a credit agency, but not with the intention of getting you to pay. Additionally, they cannot be a potty-mouth by using racial slurs, insults, or profanity to make their point.

Letting your debt be known to others. All communications from the agency need to be private. Envelopes containing letters should not have any blatant wording of it being from a collection entity. When calling to speak to you at work, they should not inform your boss or anyone else answering the phone that the call is regarding a debt.

Calling outside of normal hours. Unless you have given explicit permission for 2 a.m phone calls, agencies may not call someone before 8 a.m. and after 9 p.m. regarding debt.

Pretending to be someone they aren’t. Letters from the agency need to be on agency or creditor letterhead. It is against the law for a notice to come on “attorney” or “court” letterhead, unless it is an actual legal document from them directly.

Other illegal tactics include asking for you to provide checking account numbers or post-dated checks with the intention of prosecuting you if they come back “insufficient” from your bank. They also may not charge interest or collection fees not stated in your original purchase contract or that may be prohibited by state law.

The FDCPA also requires that agencies send a written notice within 5 days of their first contact with you. This notice must include:

How much money you reportedly owe;
The name of the creditor to whom the debt is owed;
That unless you, within thirty days after receipt of the notice, dispute the validity of the debt or any portion thereof, the debt will be assumed valid by the debt collector;
That if you dispute the debt in full or in part within that thirty day period, the debt collector will obtain verification of the debt and mail it to the consumer (please note that this does not prohibit the agency from continuing with normal proceedings during the 30-day period); and
That upon your written request within the thirty day period, the debt collector will provide you with the name and address of the original creditor, if different from the current creditor.

A “Mini-Miranda warning” must be included in the notice. This is a statement letting you know that the notice is from a debt collector any information obtained may be used to collect the debt. Every notice or letter from the agency from this point on must also contain the warning.

While there are many reputable, law-abiding collection agencies out there, it is best to make yourself aware of the proper recourse should you encounter a stinker. If you experience any problems with an agency violating the laws of the FDCPA, please contact your state Attorney General’s office. If you are dealing with an out-of-state agency, you may also call the Federal Trade Commission at 1-877-382-4357 (877-FTC-HELP). Being educated is the key to being protected. Know the law, and you can keep an old debt from ruining your life!

Like this article? Pin it!

This article is from Linsey Knerl of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: