Debt collection remains in the top five growing, profitable and fastest moving industries in the United
States. Nearly anyone can start their own debt collection business but that does not mean that all debt
collecting companies are going to succeed. You absolutely need capital in order to be able to collect on
debts, and you either need to buy portfolios or win a contract with an original debtor. Before you start
making big plans for obtaining a debt collection license and hiring and training employees, you should
review these four reasons to meet with an attorney. Debt collection can be profitable, but it is also an
industry that you need to be fully informed to excel in.
1. The Fair Debt Collection Practices Act
This federal law governs how, when, where and why debt collection companies can attempt to collect
on a debt. Prior to ever picking up a phone and contacting a debtor, you need to not only read but
understand how the FDCPA will impact your business. This will also help you to know when you are
following the rules and when you are getting close to the line. Realize that a single violation of the
FDCPA can cause your company to be fined for a minimum of $500 per violation.
2. To Find Out About Updates to Local Debt Collection Laws
In addition to federal laws that debt collectors need to comply with, there are state laws that are
forever in a crux of change. You can read a new debt collection law, but can you interpret and apply it to
your business operations properly? Go to an attorney and see if there is anything your company should
be doing different.
3. Have Your Phone Script Reviewed
Simply reaching out to a suspected debtor without confirming who you are and what the purpose of
your call is can be grounds for an expensive civil lawsuit. Since debt collectors mostly make contact by
phone, you have to be certain that your phone script doesn’t have any flaws.
4. Checking the Legality of Your Contracts
Did you know that you could get in trouble if you contact consumers and try to get them to pay on debts
that were already satisfied? In addition, did you know that your company could get fined big time for
attempting to collect on a debt at the same time as another collection agency? While consumers are
expected to pay their debts, it is a totally new and different game once it gets to the point that debt
collectors get involved. Even with computers, there’s such a thing as delays and human errors so your
company could unknowingly be operating on outdated information. Meet with an attorney who knows
the debt collection industry backwards and forwards before getting involved yourself.
The debt collection industry has room for new talent, so make sure that you are following the rules by
going over your plan with an attorney. Debtors respond more favorably to collectors who are
knowledgeable and confident anyways. Make sure that you can maintain your debt collectors license by
playing fair and knowing the law.