A small business organization will expect its billed clients to pay back the owed amount on time, so that the organization does not undergo financial stress. Many organizations try to retrieve the owed amount from the clients. Therefore, the small business organization should know the proper way to collect debt. A small business organization can encourage its clients to enroll in a non profit debt consolidation program, so that it can retrieve the owed amount partially. The organization should abide by the FDCPA law while collecting debt from its clients.
What is the Truth in Lending Act?
According to the Truth in Lending Act in 1968, compels the lender to reveal the loan terms while applying for credit. Before this act has been implemented, the lenders did not disclose regarding the hidden fees, interest rate as well as the length of time required to pay back the owed amount without incurring penalty.
How to locate a default client?
If the company owner fails to locate clients who have defaulted on the payment, then there are special laws that will help how to find the customers.
The Fair Debt Collection Practices Act of 1978 states, while making debt collection calls the organization or individual should provide the identification name or number.
Before disclosing the purpose behind the call, ensure that the person you have approached is the same person you are searching. Avoid contacting the person, if he/she is not the person you’re looking for.
If you look for the debtor through mail make sure that you do not send mail through post cards or in an envelope that contains information on a seal that states debt collection letter.
Things that a small business organization should know before collecting debt:
According to the FDCP Act, the debtors can send a letter to the debt collectors to cease communication and forbid the debt collectors from communication.
The organization will be violating the debt collection law, if it tries to contact the debtors at odd hours. In this situation, the debtor can take legal action against the debt collectors.
The owner of the organization can’t contact the debtors in the office without his prior permission.
The organization while collecting the debt from the debtors should not use abusive language. The debtor can lodge complaint with the Better Business Bureau against the company for using violence or other criminal means to collect debt. In this situation, the debtors can also sue the debt collect in the court and it might further complicate the situation.
Therefore, if you are planning to collect debt from the creditors on behalf of the company, then abide the FDCPA rule to avoid further complication.