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All You Need To Know About Collection Regulations And Laws

By Author: Prince Kapoor
Total Articles: 6
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For all business, it is necessary that there clients and customers pay for the products and services they received. But often there are parties or individual who refuses to pay the debt or misses a few payments. In such a case, most lenders or businesses take help from third-party debt collection agencies.
Most debt collecting agency work in both national and international regions and collect all kinds of debts. It includes unpaid credit card loans, student loans, medical bills, and so on.
As a consumer or a business who has yet to pay his unpaid debt, it may be frightening to get a call from a collector. But it is a legitimate business, and they are reliable companies who help debtors pay off their loan the right way.
Still, for a consumer, it is important to know about the laws and rules guiding the collection firms. It will help them safeguard their rights. In this blog, we will learn about all the regulations and laws regarding collecting agencies.

How it affects a collector when they comply with debt collection laws?

When a collection firm complies with debt collection laws, they are required to respect the privacy and rights of the debtors. Here are some general guidelines that a debt collecting company follows.
1. Treating the individual or business justly and not harassing them is important. They also have to work within the rules governing their industry while collecting debts.
2. They have to avoid using manipulative or black hat practices like harassing or making false claims.
3. After contacting the debtors, they have to send them notice regarding the details about their debt within a period of five days.
4. They have to be discreet. In no condition, they can discuss the debtors' debt with anyone.

Difference between consumer debt collection and debt collection from business and their rules

Consumer debt collection deals with unpaid debt of an individual to a business like credit card firms. While commercial debt collection deals with unpaid debt accounts that are owned by businesses. It can also involve companies that have declared bankruptcy or companies owning a large amount of money.

Rules governing consumer debt collection

Collecting debts from a consumer is subjected to various rules and regulations. To protect the rights of the consumer, all agencies adhere to Fair Debt Collection Practice Act (FDCPA).

Here are the provisions a collection firm must follow while collecting consumer debt:

1. Verifying the debt and the whole amount owned
2. Prohibition against abusing or harassing the debtor
3. Prohibition against misleading data to the debtor
4. Prohibition against using wrong means for collecting debt

Regulations governing commercial debt collection

The rules governing commercial debt collection is not regulated by FDCPA. As these delinquent accounts are more complex, there are acts and organization governing them which are regulated by commercial collection process.

I hope this article will help enlighten you about debt collection agencies and the laws governing them.

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