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Small Business Debt Collection Law Cheat Sheet
In your small business debt collection laws will eventually become important, as your debt grows and some clients do not pay.
To collect small business debts legally, you must first send a written notice that collections have begun, within five days of first contacting the debtor for collections (for instance, within five days of calling on the telephone). The letter must include dispute instructions.
Small Business Debt Collection Laws Forbidden Practices
* Collect any amount beyond the actual debt, unless you really can do so legally.
* Continue collections on a debt if the debtor has disputed the debt, unless you provide the debtor with written proof.
* Continue contacting the debtor if within 30 days of first contact, the debtor disputes the debt.
* Credit a payment the debtor has made to a non-disputed debt to a debt the debtor has disputed.
* Deposit a post-dated check before the post-date.
Small Business Debt Collections Laws: What You Can't Say
* Give a false name.
* You are an attorney or government representative, if you are not.
* You have an attorney working for you or that you are going to assign the case to an attorney, if you really do not.
* The debtor has committed a crime, unless you are 100% sure they have.
* You work for a credit bureau, if you really do not.
* The debt is more or less money than it actually is.
* You are sending or have sent legal forms when you really did not.
* You are sending or have sent papers that are not legal forms, if they really are legal forms.
* The debtor will be arrested--no one is arrested for nonpayment of debts anymore.
* You will seize, garnish, attach, or sell the
debtor's property or wages, if you do not really intend to or cannot legally do so (and unless the debt is secured with collateral, you probably cannot).
* You will sue or take other legal action, if you do not really intend to, or are not legally able to do so.
Small Business Debt Collection Laws Forbidden Third-Party Disclosures
Never:
* Give any credit-related information that is not 100% accurate.
* Tell anyone other than the debtor that you are collecting a debt.
* Telephone any number other than the debtor's more than once.
Small Business Debt Collection Phone Calls
Never:
* Call after 9 pm or before 8 am.
* Forget to give your name and your company's name.
* Call repeatedly or in a way intended to annoy.
* Make a collect call.
* Make any threats.
* Use profane or obscene language.
* Leave a message that reveals this is a debt collection.
Small Business Debt Collection Mailing
Never send:
* Postcards.
* Envelopes or mailings with any reference to debt collection on the exterior.
* Anything that looks like an official, legal, or government document, if it is not.
Please note this page is not intended to give legal advice and may not be complete or up to date with the most current collection laws changes.
About the Author
Joel Walsh has written more tips on debt collection law: http://www.debt-collection-laws.com/?%20debt%20collection%20law [Publish this article on your website! Requirement: make live link for above URL/web address with link text/anchor text: "debt collection law" OR leave this bracketed message intact.]
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United States Small Business Administration |
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Business & Small Business |
Online and print small business publication. Information to help start, grow or manage a small business. |
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SCORE "Counselors to America's Small Business" |
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Small Business and Self-Employed One-Stop Resource |
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BC Business Services offers assistance and resources for those running or starting a business in British Columbia and Vancouver. |
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Small Business Service | Home |
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NSW Small Business |
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