Business owners face many challenges when trying to collect overdue balances. Unsecured credit cards are common debts that are more difficult to collect, and collection agencies can help credit card companies get their payments. However, they must adhere to the law and avoid violations.
Contacting the Customer and Setting Up Payments
The collection agency can contact the customer and set up payment arrangements. While most consumers will avoid these types of agencies, there are some that care about their credit and will follow steps to eliminate outstanding balances from their credit reports. For business owners, the collection agencies can help collect overdue payments and generate more cash flow, according to realtimecampaign.com.
Staying with the Legal Collection Requirements
The Fair Debt Collection Practices Act prevents debt collectors from using abusive tactics to communicate with the customer. The agencies cannot contact the customer at their place of employment, and the collector cannot show up at their place of business unannounced.
The agencies cannot contact the customer before 8 am and after 10 pm. If the customer tells the collection agency to cease all phone calls verbally or in writing, the agency can no longer call them with any attempts to collect the outstanding balance.
If the collection agency violates these laws as stipulated by the FDCPA, the customer is within their rights to report the collection agency for harassment and start a civil lawsuit against the agency. Litigation In Collections: Deciding When To Sue starts with violations of the law, and if the agency violates the law, customers have the right to take legal action.
Purchasing the Accounts from the Original Creditor
Collection agencies purchase outstanding accounts from the original creditor. When they purchase the accounts, the agencies increase the balance to reflect fees associated with their acquisitions. Once the collection agency owns the accounts, they can follow their own practices to collect the balance. If the amount is larger, they could start a lawsuit against the customer if their collection efforts have failed.
Explaining the Rights of the Consumer
The collection agency must present an enclosure with the invoice that explains the customer’s rights. They will often enclose a document that explains the terms of the Fair Debt Collection Practices Act to show what the consumer can do.
The agencies offer payment options for settling the debt and eliminating negative entries on the customer’s credit history. Businesses that want to sell accounts learn more about the process by visiting this homepage now.
Updating the Credit File for the Consumer
When the collection agency takes possession of an account, a new listing appears on the customer’s credit report. The file is updated whenever the consumer makes a payment or pays off the account.
After the account is paid in full, the consumer can request that all listings for the account be removed from their credit history. Business owners can learn more about these practices by contacting a service provider such as Collection Bureau of America today.
Collection agencies are effective in following strategies to collect these balances and free up cash flow for the business. By selling the accounts to collection agencies, businesses can eliminate their liabilities and avoid long waits for payments.