Legal Considerations You Should Know While Starting a Debt Collection Company

Starting a debt collection can be hard as many people tend to collect loans without having a specific plan on how to repay it and sometimes, the plans made flops. Also, any defaulters do not know is that they have rights when negotiating debts.

If you’re about to start a debt collection agency, then you need to know the legal consideration when negotiating their debts and that constitute consumer rights.

Practices Considered Abusive in Negotiation:

·         Exposure to Constraints:

The creditor or his representative can not expose the debtor to constraints. Actions such as making collection calls to the debtor’s workplace or revealing their debt to third parties are not legally permitted practices.

Thus, when making a call to try to negotiate the debt, only the person in charge should be contacted directly.

·         Be Subjected to Threat and Coercion:

Aside from not being able to be exposed to ridicule, it is a consumer’s right when negotiating debts not to be subjected to threats and coercion as a form of pressure from the lender to receive payment. Legal limits must be respected.

Some More Limits Must be Respected by Companies When Collecting a Debt:

Making contact only during business hours – calls at inappropriate times, such as early morning or late at night, weekends or holidays, times considered as leisure and rest, are considered abusive practices.

Leave a message to third parties at home or at work in situations where the debtor is contacted per call and is not found. Privacy should be safeguarded.

Meeting the consumer in places other than work is permitted, but this practice can easily be considered abusive if it characterizes persecution, embarrassment or threat.

Care and Rights When Negotiating Debts

·         The Debtor’s Income Must be Taken Into Account:

In some situations, financial institutions try to impose on the debtor trading rules without taking into account the income of their clients. These, in turn, can request a review and make a counter proposal that is feasible within their monthly budget.

·         Negotiate Debts in Arrears Before Becoming Defaulted:

Many lenders only agree to negotiate debts when they are in default. They ignore, therefore, people who are in a day with the payment, but who have difficulties in removing the plots.

·         Right to Refuse the Offer and to Submit a Counter-Offer:

It must be taken into consideration by the creditor institution, as it is a matter between parties. The negotiation must be fair so that the debtor can fulfill what was proposed.

·         New Debt, New Control:

Among their rights when negotiating debts, the consumer must have access to a new contract, a new control, and new payment tickets, replacing the previous debt. In addition, the rights and duties of each party must be clear in the contract.

·         Credit Conditions

Before signing the new contract, the debtor must have access to all information pertaining to credit conditions.

·         Clean Name in Five Days

What few debtors know is that your name should be withdrawn from credit protection services within 5 days after account payment or debt negotiation. The responsibility for requesting the exclusion of the name is from the creditor. Otherwise, it will be liable for moral damages.

·         Negotiation of Debts

The consumer does not need to wait for the lender to look for him to start a negotiation.