Debt collection is a tricky subject that gives a basic information about the entire procedure. Before performing this procedure, you as a business owner has to understand how the consumer protection laws will apply to you. This will not just keep you informed but also result in the successful completion of the task.
Who will benefit with Debt Collection Guideline?
- debt collector that includes a debt collection agency, government agency, debt buy out service, solicitor and an in-house business collection department
- creditor who makes use of an external collection agency to assign, accumulate or sell debt to 3rd parties.
Debt collection guideline applies to creditors, individuals who are directly involved in collection of debt, and also to specialist external agencies that offer debt collection services.
A proper knowledge about debt collection terminology, rules, laws, penalties, and remedial measures will help creditors to ensure that all of their in-house collection activities are fully compliant with the consumer protection law. Debt collection guideline will help them to incorporate the rules into their compliance auditing arrangements and contractual arrangements with their assignees and agents.
Initiate Contact with a Debtor
Under the privacy related laws, you have a duty to safeguard the privacy of debtors. When initiating direct contact, it is important to first ensure the person that you are talking to is a debtor. This has to be done each and every time a contact is made before revealing any information relating to the debt, recovery process or any other confidential information.
If you find it essential to reveal your individuality as a debt collector prior to being sure that you are working with the debtor, then you can do only if it won’t have any impact of revealing that the debtor has got a debt. You must take care when conversing to a person at a workplace of the debtor.
Initiate contact for a reasonable purpose only
Communications with a debtor have to be always for a reasonable purpose. It should only happen to a specific extent. Following are the reasons when it becomes necessary to contact a debtor.
- to provide information to the borrower regarding to their account
- to initiate a demand for payment
- to make a work offer to the debtor for a flexible repayment arrangement
- precisely explain the repercussions of non-payment that includes any sort of legal remedies that are available to the collector or creditor.
- make arrangements for debt repayment
- review existing debt repayment arrangements after a mutually agreed period
- investigating whether the borrower has changed his residential location without prior information
What are the legal ways to contact a debtor?
‘Contact’ with a debtor or any other person can be done through below mentioned means.
- Communications by phone
- Communications in writing that includes email, letter, fax, text message, instant chat, telephonic application, social media application or any other similar device.
- Communications in person that includes face-to-face contact at the debtor’s home, workplace, or any other location.
Getting the required information of laws and rules pertaining to debt collection serves as a reference point for debtors’ advisers and financial counselors at the time of negotiating with collectors or creditors about their practices.