The Don’ts of Debt Collection

If you have an outstanding debt, you’ve probably attempted to collect it in one way or another. You’ve also probably considered taking additional steps if simple solutions seem to fall short. While it seems simple and straightforward, debt collection has many “don’ts,” that, if you are unfamiliar with, could cause trouble for you and/or your business.

Are you familiar with these limits? Do you understand what is permissible when collecting outstanding debts due to you or your business? If not, check out the quick guide below.

Debt Collection Limits

Providing False Statements

If you are attempting to collect a debt, you cannot give false statements. To be clearer, you cannot lie, even if you feel like it might help your case.

Examples of false statements include:

  • Claiming to be an attorney or representative of the government when you are not.
  • Representing that you work for or with a credit reporting company when you do not.
  • Changing the amount of debt owed.
  • Claiming that certain forms or papers are “legally binding” when they are not.
  • Claiming that the debtor has committed a crime when he or she has not.

Making the Following Statements

In addition to the falsities listed above, the following statements are also off limits:

  • Stating that the individual whom owes money will be arrested if the debt is not recovered.
  • Claiming that you will take legal action if you do not attend to do so.
  • That you will seize or garnish property or wages, unless you have the legal power to do so.

Harassing Debtors

While you may be frustrated with the situation you are dealing with, you cannot harass the individual or company that owes you money. Examples of harassment include:

  • Publishing a public list of names of those that owe you money.
  • Threatening to harm the individual that owes you money.
  • Using obscene language or profanities.
  • Using the phone to “annoy” someone (you cannot call every ten minutes until you get a response, for example).

Actions to Avoid in Debt Collection

In addition to the aforementioned statements and actions, there are other actions that are off limits if you are attempting to recover an outstanding debt.

For example, you are not permitted to give false credit information about the debtor to anyone, including a credit reporting company. Additionally, you may not use a false company name or any other inaccurate pretense to attempt to recover a debt in a faster manner.

Unfair Practices are Also Prohibited

Under the Fair Debt Collections Practices Act, certain practices – those that are unfair – are prohibited. A few of these include:

  • Depositing a post-dated check early.
  • Attempting to collect additional interest, fees or other amount over that which is owed unless a law or the original contract outlines it.
  • Contacting the individual that owes money by post card.

Protecting Yourself

It’s a difficult situation. Your business may depend upon the debt that is owed being paid to operate. Or, you may need that payment to move forward. Regardless of the situation, there are certain lines you cannot cross. Failing to heed the limits listed above, and others, could end in you or your business being held liable if charges are brought against you.

Because of the delicate nature of debt collection, in many cases, consulting with an attorney or practice that specializes in debt collection may be an appropriate first step.

If your business is struggling with debt collection, or has questions about how to proceed, set up a consultation with an experienced attorney like Michael Hynum of Hynum Law. Our firm is available to answer questions and to create a plan of action to move forward.

Give us a call today, we look forward to working with you.