Know Your Debt Collection Rights: A Guide To The Laws That Protect You

Having your account transferred to a collections agency does not signify the "death" of one’s business. Financial analysts understand that there are mitigating circumstances that may cause a company to be late in its payments. That said, many executives take the hit rather seriously and consequently ignore the realities of the situation. This includes not knowing or understanding their rights. Reputable collections agencies remind their clients on both sides that they strictly abide by mandated laws. There are laws that limit what debt collectors can say or do.

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The Fair Debt Collection Practices Act (FDCPA) defines the limitations on what every debt collector can do when collecting particular types of debt. The federal law also describes how debt collection is reported in credit reports all with specific state protection policies. The FDCPA encompasses the debt collection of mortgages, credit cards, medical debts, and other debts that for personal, family, or household purposes.

There are many stipulations recorded in the FDCPA, but all of these policies are based on the foundation of protecting consumers from debt collection companies that use abusive, unfair, or deceptive practices to collect debt. While the FDCPA does not cover business debts, company owners should know that unlawful or abusive acts of business debt collection agencies such as calling at irregular hours or practicing rude behavior are still considered unlawful. For these cases, entrepreneurs can speak with a legal professional to see what actions can be taken. It is highly recommended though to talk to the collections agency first before considering any legal action. Usually, the company will handle its representatives personally. However, if there is indeed a discrepancy between the company and the collections agency, it may be best to seek a mediator. It is also suggested to keep a record of all correspondence as proof of evidence.

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One of the reasons Brennan & Clark Collection Agency is a leading collections group is their transparency in all of its actions. For more on business debt collections, visit this blog.

Business Debt: Assessing The Need to File For Bankruptcy

Whether in using up credit lines or applying for bank loans, most businesses often incur debts as part of their operations. Not all companies, however, have to capacity to fulfill their obligations to their creditors.

This is the reality and sadly, many businesses file for bankruptcy as a means to redress their debts. Although bankruptcy can always be considered, it needs a lot of thought and effort on the part of the borrower to chip away financial obligations little by little.

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First, there is always a distinction among different kinds of debts. Some debts are held at much better esteem than others. That said, businesses should always reassess their financial standing with special focus on their credit standing vis-a-vis business performance.

For example, if current debt contributes to improved operations and therefore brings increased income, then filing for bankruptcy can be considered “premature” since the business is still earning from the debt incurred. Bankruptcy should be filed during hopeless cases, i.e., when debt has eliminated the income potential of the company.

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Although filing for bankruptcy may offer many advantages such as wiping out certain debts, it can also mean, depending on the contract, returning properties to the creditor. This rule is applicable to “secured debts” or loans such as car loans and mortgages, wherein personal property have been put up as collateral for unpaid loans.

Before filing for bankruptcy, financial obligations must be addressed in a strategic way. There are many options for restructuring debt or paying it off slowly. Companies that mediate for debt solutions between creditor and borrower could also be tapped.  

Brennan & Clark is a collection agency that offers customized receivables support solutions to businesses. Follow this Twitter account to learn more about the company.