American Credit Collections — How to NOT collect a debt

Handing my tenant debt without delay to a collection agency is not my original preference. Myself, I would initial report the debt to Experian, Equifax and TransUnion, and let the ding on the debtor’s credit work a few months before I gave it to an agency that will charge me a hefty commission.

Collecting tenant debt is much dissimilar than gathering other debts, such as credit card debt. A collection agency represents you and your business, and you could be taken to court must they violate the law. And, just as indispensable as any legal matters, is how well they will gather your debt.

I have worked in the industry for 12 years and would like to believe that most collection agencies work hard, ethically and within the law. But, as in most industries, there are those agencies that I consider to be renegades. They operate outside the law, or right on the edge. Unfortunately, these companies get all of the press, therefore making all agencies look bad.

The fact of the matter is that the collection industry fills a critical need in the business world. Imagine if everyone could just stop paying their bills with no repercussions. Do you think any bank would loan any person any money? And what would it do to the prices of all goods and services?

Here are what I consider the most indispensable elements in hiring an agency to gather tenant debt:

o Has the agency had any verified Federal Trade Commission (FTC) violations? The FTC regulates and investigates the collection industry; more than one violation would concern me.

o Is the agency licensed in all 50 states? While this is not required to do business, this question helps me sort out the companies that have a national presence and are big sufficient to fulfill the galore state requirements.

o Is the company bonded and insured? If the company does not carry a minimum of $1 million dollars of liability insurance, I would not give them my business.

o Does the agency have membership in the American Collectors Association? Again, not required to operate in the industry, but it may show the level of interest and participation the company has in it is own industry.

o Does the agency report debts to Experian, Equifax and TransUnion? This is one of the greatest collection tools agencies use to motivate a debtor to compensate his or her debt. Not all companies report.

o What type of debt does the company specialize in? The list of types of debt agencies gather is extensive. They may gather mercantile or buyer debt. Consumer debt may be a car loan, credit card, utility bill, mortgage, medical bill, rent, etc. To do a good occupation gathering tenant debt, an understanding of the terminology and the business is critical. Very few nationwide collection agencies specialize quintessentially in gathering this type of debt.

o Does the company gather judgments as well as non-judgment accounts? Few companies that gather debt for landlords gather both types of accounts.

o Do they work the account for the life of the account? It is mutual for agencies to work the most recent accounts they receive the hardest. As an account ages, it is deemed less collectable. Often agencies will work the account hard eight to ten months, and after that they rely closely solely on the credit bureau reporting to support gather the debt. It costs a company more to have a gatherer working older accounts; consequently suppose a good agency to charge a higher fee. I want a company that works the account for as long as it is legally possible. If reporting the debt to the credit bureaus is sufficient to gather the debt, I may do that very without apparent effort and cheaply myself without paying any commissions.

o Does the agency pre-judge accounts? In the industry this is called “rating the paper.” Amazingly, at least one company that specializes in tenant debt brags that they rate accounts before they even begin gathering them. This allows the company to spend it’s time and resources on debts they “believe” are the most collectible. This reduces their overhead, but does not one thing to support some of their clients. Landlords that lose out are those that rent intermediate apartments to each day intermediate people. Do you want to hire an agency that only focuses on high-end properties, with well-to-do debtors? You would get regarding the same amount of effort if you reported the debt to Experian, Equifax and TransUnion yourself, for a lot less money!

o Does the agency receive collection accounts from independent landlords? At least one of the few nationwide agencies that specializes in tenant debt will only take on clients who own or manage a minimum of 100 rental units. This is because they do not want to be bothered by client service calls from independent landlords.

o Will the company provide you with references from other landlords who use their services? References are important so that you may learn not only how well the agency collects your money, but also how they treat their clients. I have known of agencies that treated their clients poorly when they called with a question or concern.

o Does the agency you consultation brag regarding how much better they recover debt than other companies? If they do, run! Run for a couple of reasons: If in truth they do gather more than other agencies, how do they do it? Do they threaten debtors and violate the Fair Debt Collection Practices Act (FDCPA)? This could increase the prospects of your being dragged into a lawsuit. Likely their boasting is merely a sales ploy, and a cheap one at that. An overall intermediate of how much they gather means when it comes to as much to you as what they had for breakfast. Plus, you have no way to verify their claims. The truth is that is no one may predict how well they may gather for you until they look at your accounts and work on them for awhile. In fact, it may be a couple of years before you may realistically evaluate whether the company you hired was effective. This is why doing your exploration up front is so very important.

o Does the agency charge you a fee to take on your debtor file? Unless they may warrant the charge, and it seems as if they are an splendid company, I would proceed looking for another company.

o What does the agency charge for gathering your debt? This question comes last, because it is the least important; but, it is oftentimes the basi question I am asked. When I am asked this question first, I recognise I am talking to an individual who does not recognise what else to ask. The fact is that you may find a company that charges 30 percent of what they recover. But, for 30 percent, they are fixed in the resources they may commit to gathering your debt. Would you rather see a recovery of 30 percent of nothing, or 50 percent of a $3,000 debt? Do not be gulled by a very low commission rate.

I realize that this is a very long list of questions and concerns. But, once you have done your homework and hired an agency, you may get on with the task of running your business and not worry with regards to it further.

A good share of tenant debt is recoverable if you and the agency you hire do your jobs. It may take galore time to gather what you are owed, but recovering lost earnings at any point is icing on the cake.

Again, sending an account to an agency is not my primary choice for gathering tenant debt. My system of belief is that I would report the debt to the credit bureaus myself and gather the requiring little effort debt. After assorted months, when I had already assembled the easy debt, I would give the account to a reputable agency and let them get to work.

Contact me with your specific tenant debt questions and I will try to help.

Bill@thelandlorddoctor.com

Bill Gray

American Credit Collections How To Not Collect A Debt

This digital document is an article from General Accounting Office Reports & Testimony, published by Stonehenge International on November 1, 2009. The length of the article is 1032 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available without delay after purchase. You may view it with any web browser.

Citation Details
Title: Credit Cards: Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology.
Author: Unavailable
Publication: General Accounting Office Reports & Testimony (Report)
Date: November 1, 2009
Publisher: Stonehenge International
Volume: 2009 Issue: 11 Page: NA

Distributed by Gale, a share of Cengage Learning

Excerpt. © Reprinted by permission. All rights reserved.

GAO-09-748 September 21, 2009

Approximately 6.6 percent of credit cards were 30 or more days past due in the basi quarter of 2009–the most eminent rate in 18 years. To recover delinquent debt, credit card issuers may use their own collection departments, outside collection agencies, collection law firms, or trade the debt. GAO was asked to thoroughly and closely question or examine (1) the federal and state buyer protections and enforcement responsibilities affiliated to credit card debt collection, (2) the processes and exercises involved in gathering and retail delinquent credit card debt, and (3) any issues that may subsist related to a good deal of of these processes and practices. To address

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