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Unfair Debt Collection Practices Article
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Tips to Successful Bad Debt Collection
Bad debts are a huge problem. Bad debt collection is an even bigger problem. When a debtor has stopped making payment months or years ago, the debt is considered a bad debt. This debt can be written off and declared as a loss. The problem is that banks, lending companies, and smaller creditors need to survive. If they keep on declaring bad debts as losses, they will keep losing money. For smaller businesses, it means valuable money that could have been used for operational expenses. More importantly, if bad debt collection doesn’t happen, debtors will assume that their creditors will just let them off the hook.
So, how can a company achieve successful bad debt collection? The key is in the correspondence with the debtor. First of all, make sure that your debt collectors follow the provisions of the Fair Debt Collection Practices Act. Although you’re desperate to get your money back, you’re not allowed to use threats and insults to intimidate the debtor. You want to get paid, not get sued.
Secondly, use all possible venues for communication. You can call, email, fax, or make a personal visit. Make sure that you find a way to communicate with the debtor. Let the debtor know that you are serious about collecting that bad debt. Bad debt collection is about informing debtors that they are responsible for their debts. The best thing you can do to communicate with your debtors is to send collection letters. In these letters, you should indicate the details of the debt – the amount, the transaction information and the original creditor. Provide all the necessary information and attach any other document that the debtor needs to verify the nature of the debt.
Why letters? The debtor may just dodge your calls, but he cannot escape the collection letter. At the same time, the debtor may be aggressive and defensive when you call. He will keep interrupting you, and you will not be able to give the information he needs to know. In addition, collection letters are valuable documents that can be used as evidence in the event that the matter goes to court.
Thirdly, give a deadline. Be strict and confident. Bad debt collection is about letting the debtor know that you want the debt settled as soon as possible. Don’t ask when it is convenient for him. Say that you want the debt settled by tomorrow. If he says he can’t pay by tomorrow, then you can negotiate. In the end, don’t fall for his excuses. You should try to set a definite deadline.
Also, you need to be respectful. If the debtor finds that you are nasty, you’re just giving him more reasons to ignore you. If you want him to pay, you have to establish a formal but cooperative relationship.
Lastly, if you have tried all of the above and you still cannot succeed in bad debt collection, contact a collection agency to help you.
Unfair Debt Collection Practices Specific links
Unfair Debt Collection Practices News
Debt Collector to Answer for Confusing Letters - Courthouse News Service
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The Business Finance Store Discusses Small Business Debt Collection - San Francisco Chronicle (press release)
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Tony Mira: Collecting Payments from Anesthesia and Pain Medicine Patients - Becker's ASC Review
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OFT criticises Wonga debt collection practices - The Guardian
 The Guardian | OFT criticises Wonga debt collection practices The Guardian Payday loan company Wonga has been told by the Office of Fair Trading (OFT) it must improve its debt collection practices, after it emerged it had sent letters to customers accusing them of committing fraud. The OFT said it had seen letters sent out to ... OFT tells Wonga to improve debt collection practices Payday lender Wonga sent aggressive letters to customers with debts Wonga under fire from OFT |
Fair Debt Collection Reform Bill Re-Introduced by Barney Frank - InsideARM
 InsideARM | Fair Debt Collection Reform Bill Re-Introduced by Barney Frank InsideARM Thursday introduced another bill that would amend the Fair Debt Collection Practices Act (FDCPA) to specifically exempt debt collectors from liability when using approved language in voice mails and messages. The bill's (HR 5794) purpose, as officially ... |