Tuesday, July 17, 2012

The Standard Operating Procedure for the Collection of Debt From Nonpaying Customers

An unpleasant part of having a business is having to collect on unpaid debts. Debt collection can be easy if the customer simply forgot to pay or is having temporary financial problems. However, you may have to resort to legal tactics to collect some debts. The debt collection process is straightforward and basically the same in most cases. Before attempting to collect any debt, make sure you understand the laws within the Fair Debt Collection Practices Act to avoid inadvertently breaking the law.

Payment Reminder

    Contact the customer by phone, mail or email to request payment of the past due amount. Tell the customer the total balance they owe and how much they must pay to keep the account current. Do not call the customer between 9 p.m. and 8 a.m because the FDCPA considers those hours inconvenient for most people.

Final Notice

    Wait 30 days for the customer to respond with payment or a plan to pay the overdue amount over time. If the customer does not respond of refuses to pay, send a notice by mail stating the debt amount, the consequences of continued nonpayment, such as filing a lawsuit or charging the debt off and giving it to a collection agency. Give the date that the customer must pay by to avoid further collection activity. This is usually 15 to 30 business days after the notice date.

Lawsuit

    Contact a lawyer if the customer still hasn't paid by the final notice date. If the customer owes a substantial amount of money, often more than $1,000, the lawyer will let you know your options for filing a lawsuit and the likelihood of winning the suit. Do not attempt to file a debt collection suit by yourself because you could fail to include important information in the petition that may cause the judge to rule against you. If the court finds in your favor, it will make a legal order for the customer to pay and may garnish the customer's wages or bank account.

Debt Collection Agency

    Contact a debt collection company if you do not want to file a lawsuit. The debt collector must be licensed in the customer's state. A debt collection agency agrees to pursue the debt for a percentage of the debt. Depending on the amount, type and age of the debt, this percentage can be from 10 to 50 percent. This is often better than pursuing the customer yourself because debt collection can be time-consuming.

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