Your Top 5 Debt Collections Questions Answered
Debt collection is an important part of your business. It is part of your bottom line. If you were to seek out an investor or a business loan, the number of default accounts, the amount of each account, and whether you were able to collect on it would all be considered. Clients ARM is a licensed third party debt collection agency in several states. We also assist companies with their first party collections needs. Since we have more than 30 years of experience in debt collecting, we want to share our knowledge with you. Here are the top five debt collections questions that we are asked.
What Is First Party Debt Collection?
First party debt collection means that your business takes on its own collections. It means that you or someone from your company calls clients who are past due in an effort to collect. Your business is the first party. More simply, you did not sell the debt or assign it over to a third party debt collection agency.
For example, if you own Smith Family Healthcare and you have someone who calls on past due accounts, it might sound something like this:
“Hi. My name is Tom. I am with Smith Family Healthcare. I need to speak with Jane Smith.” To get your free sample phone debt collections script, click here.
Yes, there are some debt collection agencies, such as Clients ARM, who offer first party collections on behalf of your business. The debt collection professional calling on behalf of your company would still introduce themselves as an extension of your company.
First party debt collections is often better for your business. It continues to solidify the relationship with your client. Why would you want to do that with a past due client? It may seem strange, but there is a good reason for it. If your past due client didn’t realize that they were past due or if they had a legitimate concern that stopped them from paying their bill, wouldn’t you like to save that relationship? First party debt collection is more personal. When you choose the right first party debt collection service, it helps protect your reputation as a business. Yet, it is also important to remember that a debt collector’s behavior will reflect directly on your business. If a past due client feels bullied or attacked, your reputation as a business can suffer. It could cost you future business. According to NPR, many people who are in the collections process feel as if they are being abused by debt collectors.
What Is Third Party Debt Collection?
Third party debt collection means that you’ve either sold the debt to a debt collection agency or you’ve hired a debt collection agency to collect on it. The difference between first part and third party debt collection is how the debt collector identifies themselves on the phone. You’ve read an example of first party debt collections. An example of third party debt collection is:
“Hello. This is Susan with Clients ARM. I am calling on behalf of Smith Family Healthcare. I need to speak with Jane Smith.”
In this example, the agent would identify the company they are with (Clients ARM) and who they are calling on behalf of (Smith Family Healthcare). Again, it is important to point out that the behavior of any third party debt collections agency reflects on your business. So, make sure that you do your research on debt collection companies.
Can I Call Debtors Whenever I Want?
The answer is no. The Fair Debt Collection Practices Act lays out the ground rules of how and when debt collectors (or businesses) can contact debtors. You must call during reasonable hours (not before 8 AM). You should not call at night (after 9 PM). Also, if the debtor requests that you stop calling them at work or at home, you must abide by their request.
Do I Have to Prove They Owe Money to My Business?
If a debtor requests validation of a past due account, you must provide it. A validation notice must include the amount owed, the name of the business to which is owed, and instructions on how the debtor can dispute it if they believe that they do not owe the money. You must send this notice within five days of it being requested.
What Isn’t Permitted for Debt Collections?
The Fair Debt Collection Practices Act along with the TCPA outline how you can and can’t collect on past due accounts. The basics of what you can’t do include:
- Call before 8 AM.
- Call after 9 PM.
- Harass, abuse, or oppress the debtor.
- Threaten the debtor.
- Curse at the debtor.
- Use the phone simply to annoy the debtor.
- Make false statements.
- Say that the debtor will be arrested.
- Say that you’ll take legal action unless you plan to do it.
- Engage in unfair practices.
Questions About Debt Collection?
If you have questions about debt collection, call Clients ARM. We provide free, no obligation consultations for businesses in need of debt collection. We are licensed as a third party collector in several states. We also provide first party collections. Clients ARM charges a contingency fee. To learn how we can help your business, call us! You’ll be glad that you did!