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David Toback, Attorney at Law
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Be Careful How You Collect Your Business’ Debts

Collecting from clients or customers who owe you money can be one of the most unsavory parts of running a business. Aside from the natural discomfort of asking people for money owed, as accounts receivable but unpaid accrue, cash flow slows down, and the ability to properly run your business may diminish, making collections both uncomfortable, but also necessary.

Many business owners aren’t aware that there are laws that apply to them when they collect debts. Collecting debts the wrong way can end up with you owing your customers money instead of the other way around.

Which Laws Apply to Business

Many people believe that debt collection laws only apply to “debt collectors,” companies that traditionally collect other people’s debts. Many believe that collecting your own debt allows you to do and say anything that you want to.

There is some truth to this, as federal collection laws only apply to debt collectors, not original creditors. However, Florida’s collection law, the Florida Consumer Credit Protection Act (FCCPA), applies to all “persons.” Thus, it applies to anyone, even your business collecting on its own debt.

The FCCPA only applies to debt that is for consumer, household or personal items. The laws do not apply to the collection of business debt.

How to Avoid Trouble

There are some guidelines that you should follow, to avoid violating debt collection laws while collecting debts that are owed to you, assuming they are not business debts:

  • Only communicate with the debtor – Don’t speak to the debtor’s spouse, family, or business partner about the debt. You should try to refrain from leaving messages on a phone line, unless you know the phone line belongs to the debtor. Never tell anyone else about the debt (other than attorneys, accountants, or courts).
  • Don’t threaten – You should never make threats to try to collect the debt. Certainly, you can inform a debtor that you may file a lawsuit. But threats of judgments, garnishments, taking property, or arrest, should always be avoided. Even threats to tell employers or others about the debt, should be avoided.
  • Keep communications reasonable – You can certainly call a debtor once a day. But repeated calls, or excessive written letters, could be considered harassing. You should never call a debtor between 9pm and 8am.
  • Never harass – This is an open interpretation. Coercion, lying, or pretending you are from law enforcement, the government or an attorney’s office, are all forbidden.
  • Speak to your debtor’s attorney – If a debtor has an attorney, you must communicate with the debtor’s attorney only—not with the represented party.
  • Consider the effect of bankruptcies – Have you done an online search to make sure that the debtor didn’t file bankruptcy? If he did, you likely would have been notified when the case commenced, but notices are often overlooked. Collecting on a debt that has been discharged in bankruptcy is illegal.

Following these simple common sense rules can make sure your business collects the money it’s owed, without getting into legal trouble.

Don’t get in trouble running your business. Contact Tampa business attorney David Toback to discuss your needs and discuss how to make sure that your business is safe and in compliance with the law.

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