Its official, times are tough. They are tough for consumers and they are tough for businesses.
U.S. consumer bankruptcy filings increased 30 percent during the first six months of 2008, according to the American Bankruptcy Institute, and delinquency rates for loans tracked by the American Bankers Association continue to rise.
What does that mean for business? More and more people are paying late or, worse, not paying at all.
Because of these recent trends, more and more businesses are getting aggressive with their debt collection. If you're one of these companies, you must pay close attention to the Fair Debt Collection Practices Act (FDCPA) and state collection laws. Not just collection agencies need to abide by these laws. In most states including Massachusetts, businesses need to adhere to these laws or pay stiff fines if they don't.
In most states, you can only call to collect an unpaid debt between the hours of 8 a.m. and 9 p.m. Any time before or after that is considered "inconvenient" and illegal. All calls must not be at an inconvenient time for the debtor.
For instance if you call a home and the person tells you their child is napping and that time is inconvenient, you cannot call again at that time. Also, if they say they are represented by an attorney, you must go through that attorney and not call on that debtor again. If the person you are calling says they will not pay or asks you to stop calling, you must stop calling them. Also, you cannot cause their phone to ring repeatedly with any intent to annoy or harass.
You cannot use inappropriate language during your attempts to collect and you cannot threaten any harm or violence. This may sound pretty basic but it's happening more often as people get more frustrated.
You also cannot threaten any advanced course of action that you are not prepared to carry out. If you inform the person you are calling on that you are sending the account to a collection agency or attorney, you must be prepared and have the capability to act on that.
Go To The Source
You must only talk to the person who incurred the debt. Many states allow you to speak to the spouse as well, but not all do, so be very careful. Refrain from speaking with any relatives, friends, associates and even parents of consumers over age 18. This would be considered third party disclosure and is not acceptable in most states.
Work It Out
You cannot collect any fees such as interest unless the consumer is aware of this upfront and you cannot deposit or threaten to deposit any postdated check prior to the date on the check. What you can do after all this is act early and act respectful at all times.
Try to work with the person who owes you money and work hard to come up with a resolution and even a payment plan. Tough times call for a little flexibility from both parties.
Jeff DiMatteo is a partner at Marlborough-based American Profit Recovery Inc. He can be reached at 877-634-8900 or email@example.com.