Collecting Debts While Obeying the Law

Your first line of defense against past-due accounts is a vigorous credit check. Your second line of defense against late payment is a clear-cut and rigorous collection policy.

If that fails to solve the problem, there are professional bill collectors you can hire to take over the process. Be aware, however, that federal and state laws govern the steps that third-party collectors can take.

The U.S. Fair Debt Collection Practices Act deals specifically with what debt collectors can and cannot do to try and get your money back.

It is legal for a collector to contact a debtor in person, by mail, telephone, telegram or fax.

Collectors can contact a debtor at home, but they must identify themselves and the reason for their call. They cannot call a debtor during odd hours (generally late at night or early in the morning) or when they are at work. Collectors can call a debt dodger´s relatives and friends to inquire about a debtor´s whereabouts, but collectors cannot bother relatives or friends to pay the money owed by the debtor.

If you or your company is being pursued for unpaid bills, you may stop a collector from contacting you simply by asking them to stop or by writing a letter to the collection agency telling them to stop. Collectors are forbidden from contacting you again except to say there will be no further contact or that the creditor intends to take some specific action against you (such as filing a lawsuit).

A few other rules of the collection game:

• If the debtor is being represented by an attorney, all calls and letters to the debtor must go to the attorney. No postcards are allowed.
• The days of the leg-breaking collector are over. Those making collection calls cannot use violence or a threat of violence, and they may not use profane or obscene language.
• No collector can make a list of debtors for publication or for advertisement to coerce payment. Collectors also cannot represent themselves or the creditor as a court or government entity.
• Collectors cannot misrepresent the debt or misrepresent themselves as an attorney.