If you owe an outstanding debt to another company and haven’t paid them in spite of their efforts to collect, you will likely get a call from a debt collection company.
What do you do when the call arrives? Business debt collection companies operate differently from companies that deal with personal debts. It’s important that you understand the dos and don’ts of the collections process, and become familiar with your rights.
The first rule: don’t ignore the problem
If a collections agency has been sending you letters, you may be tempted to pretend that the problem doesn’t exist. Ignoring debt can make the problem worse than it is, however. If you ignore a collector’s calls and letters,
they may report the debt to a business credit reporting bureau. If the debt gets on your credit report, it can stay there for as long as seven years.
When a debt collection agency gets in touch with you, talk to them, and ask for details. The law allows you to request validation within a month of having a collections agent contact you. You should be able to determine whom you owe the debt to, when you incurred the debt, and what the sum at issue is
Don’t admit to anything
Debt collection agencies sometimes get business names, and the debts owed mixed up. When an agency first makes contact with you, it’s important not to acknowledge that you owe anything. If the company has attributed the debt to you by mistake, acknowledging the debt can put you in a difficult
situation. All you need to do is to ask for validation or proof that you owe the debtin question.
Some collectors try to get debtors to verbally admit to owing a debt before they show proof. Sometimes they ask debtors to make small advance payments to show good faith. It’s important to do none of these things. Even a small amount of money paid can be seen in court as an admission that you owe the sum in question. If it is legal to record conversations in your state, you should do it so that you have as much proof as possible of everything that transpires.
Look into the claim
Once the debt collection agency provides you with validation of the debt, you need to research it. It’s important to make sure that the debt is something you really do owe, that you haven’t already paid it at some point in the past and that the sum claimed is accurate. It’s also important to gather information about how old the debt is. If a debt is very old, the statute of limitations may have passed on it, rendering it uncollectable.
Hire a lawyer
In many cases, debt collection agencies have so little information on the debts that they purchase that they have no actual hope of collecting. If there’s any part of the debt collection attempt that you disagree with, you should dispute the debt in court. If you show up with a lawyer, the agency is likely to give up the case right away.