If you as a Business Owner have someone who owes you money, you’ve probably attempted to collect it in one way or another. If your initial attempt has fallen short, you probably have considered taking additional steps. While it seems simple, debt collection has many “don’ts” that, could cause trouble for your business.
Are you familiar with these limits? Do you understand what is permissible when collecting outstanding debts due to your business?
Debt Collection Limits
Providing False Statements
If you are attempting to collect a debt, you cannot give false statements. You cannot lie, even if you believe it might help your case.
Examples of false statements include:
- Claiming to be an attorney or a representative of the government when you are not.
- Representing that you work for or with a credit reporting company when you do not.
- Changing the amount of the debt owed.
- Claiming that certain forms or papers are “legally binding” when they are not.
- Claiming that the debtor has committed a crime when he or she has not.
Making the Following Statements
- Stating that the individual who owes you money will be arrested if the debt is not recovered.
- Claiming that you will take legal action if you do not intend to do so.
- That you will seize or garnish property or wages, unless you have the legal power to do so.
Harassing Debtors
- While you may be frustrated with the situation, you cannot harass the individual or company that owes you money. Examples of harassment include:
- Publishing a list of names of those who owe you money.
- Threatening to harm the individual that owes you money.
- Using obscene language or profanities.
Action to Avoid in Debt Collection
In addition, there are other actions that are off limits if you are attempting to collect an outstanding debt.
For example, you are not permitted to give false credit information about the debtor to anyone, including a credit reporting company. You also may not use a false company name or any other inaccurate pretense to attempt to recover a debt in a faster manner.
Protecting Yourself
It’s a difficult situation. Your business may depend upon the debt that is owed being paid to operate. Or you may need that payment to move forward. However, there are certain lines you cannot cross. Failing to heed the limits above and others could end up in your business being held liable for damages.
Because of the delicate nature of debt collection, consulting with an attorney that specializes in debt collection may be the appropriate first step.
If your business is struggling with debt collection or has questions about how to proceed, set up a consultation with me. I am available to answer questions and to create a plan of action to move forward.
Give me a call today at (717) 697-4700 or e-mail me at bzellner@waltersgalloway.com.
