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Dec 12, 22

When Can You Legally Send Someone to Collections

Sending a revised invoice with additional late fees (or sometimes warning a customer that you want to send such an invoice) may result in payment. In this case, you do not need to send the client to the collections. Once you`ve learned how to send someone to collections and are looking for the right choice for your small business, look no further than Stevens & Ricci, Inc. We offer services in all 50 states, and we have a higher collection rate for slow, non-payment bills than our competitors. Debts usually don`t go away, but debt collectors have a limited amount of time to sue you to collect a debt. This period is called the “limitation period” and usually begins when you miss a payment for a debt. After the limitation period, your outstanding debt is considered “time-barred”. Sending someone to collections is a colloquial language used to hire a debt collection agency to collect an outstanding debt. The decision to send someone to the collections should be seriously considered. Federal law governs how you and the collection agencies you hire can and may attempt to collect a claim. Once you`ve decided that you need to send your client to a debt collection agency, you need to decide which debt collection agency is right for your business.

It is important to choose a good debt collection agency to have the best chance of collecting unpaid invoices. As for collections, it`s a good idea to carry them over as long as possible. Negative reviews, poor customer experience and paying the collection agency between 25 and 50% of the amount collected are good reasons to avoid the process if possible. In short, don`t do it if you don`t have to. Whether you use a debt collection agency or handle debt collection yourself, all debt collection processes must comply with the Federal Fair Collection Practices Act (FDCPA). Breaking this law can make you and your collection agency seem untrustworthy, and it can give your debtor a stronger argument if they decide to sue you. The collection statute of limitations is the amount of time a collection agency has to legally sue you for a claim. A debt collector only has a certain number of years during which they can sue you to force you to pay a debt you owe.

The maximum law nationwide is 15 years. However, in most states, the duration of credit card agreements and loans is limited to 4-6 years. Did you know: During the collection process, neither you nor the collection agency you use should inappropriately communicate with the debtor, threaten legal action or provide false information. If you decide to send someone to collection, you want to make sure that you, as a business, are doing everything you can to handle late payments. Make sure you comply with all debt collection laws to make sure you don`t have any legal problems. If you have a debt in collection, you need to know exactly when the clock expires. In most states, the statute of limitations begins on the day the account becomes delinquent. Therefore, this is usually the date your last payment was made to the original account. If you have a customer who has an overdue account with you, you have the option to send it to a collection agency. Sure, this should be a final fix, but it`s important to know how to get it right as a creditor if you have a customer with outstanding debts that you need to collect. Do you want an accounting system that sends reminders to those who still owe you money? Sign up for Lendio for free.

If you`ve followed the two steps above and still haven`t collected the outstanding debt, contact a lawyer to help you create and send a claim letter, also known as a collection letter. A letter of claim is a formal letter explaining the consequences that will be taken if the debt is not paid. A debt collection agency cannot sue a debtor on your behalf, or seize a debtor`s assets or garnish their wages. They may indicate that an account on the debtor`s credit report is in collection, and they may contact the debtor regularly (except as described above), but that`s all they can do. It is up to you whether you want to take the matter to court. When shipping to debt collection, the agency takes a portion of the outstanding debt as a fee. The advantage of this approach is that the responsibility for recovery is not in your hands. If possible, send your counter letter by registered mail (with “acknowledgment requested”) to let you know that it has been officially received by the collector. The collector then has 30 days to determine whether the disputed object is correct or not.

If you run a business that offers lines of credit to customers, it may become inevitable to have to send someone to debt collection. Whether it`s a tenant who has unpaid rent for a property or another debtor who owes you money, it`s important to learn good collection practices. If you`re doing it for the first time, it can be intimidating to figure out how to do it right, and you`ll need to follow the Fair Debt Collection Practices Act to do it legally. There are no federal legislation regarding the licensing of debt collectors. Most states require debt collectors to be licensed, but not all. In addition, it is not difficult to obtain a license. Any one-person business can obtain a driver`s license if it has a valid driver`s license. Most experts agree that creditors should wait at least 90 days before sending an account to debt collection.