3 Debt Collection Mistakes You Should Never Make

Your business has a number of outstanding payments from customers. You’re ready to take matters into your own hands and convince those customers to pay what they owe you. 

Before you pick up the phone, you should know that debt collection is a delicate process. If you don’t know what you’re doing, you could stumble into a serious mistake–or several of them. 

Common Mistakes Businesses Make in DIY Debt Collection

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1. Violating the Fair Debt Collection Practices Act (FDCPA)

If you’re not careful with your debt collection efforts, you could accidentally violate the Fair Debt Collection Practices Act (FDCPA). The FDCPA is a federal law that sets clear guidelines for how companies can interact with debtors. Violating this law could land your business with a fine or a lawsuit. 

Violating the FDCPA is an all-too-common problem. The Consumer Financial Protection Bureau’s annual report on the FDCPA stated that the bureau received approximately 109,900 debt collection complaints from consumers in 2023 alone. The complaints covered violations like attempting to collect debts that aren’t owed, threatening negative action or making frequent calls. 

When you’re not well-acquainted with all of the rules of the FDCPA, it’s easy to accidentally break those rules.

2. Failing to Keep Documents

Paperwork is very important when it comes to debt collection. When you don’t have proof of payment requests and customer communication, your business is more vulnerable to disputes over debts. You need to have a clear paper trail.

3. Using Aggressive Communication

Not getting paid can be very frustrating, but you still have to be calm and professional when reaching out to customers who have yet to cover their payments. 

You don’t want to make the mistake of using aggressive communication tactics, like making frequent calls, leaving angry voicemails or contacting the customer’s employer to push a customer to settle their debts. There are two big reasons why this is a mistake. First, it’s a violation of the FDCPA. Second, it’s not effective. 

Being too aggressive with collection will make customers less likely to resolve their debts. They may not respond to your communication attempts and they may continue to evade payment. 

How Professional Debt Collection Firms Can Help

Avoid these common debt collection mistakes by turning to an experienced debt collection agency for help. Instead of trying the DIY approach, let the professionals tackle the job for you. 

Compliance with Debt Collection Regulations

You may not be aware of the regulations of the FDCPA, but a debt collection agency will know them and follow them to a tee. So, any collection efforts that an agency handles for your business will be legally compliant, which means you can avoid consequences like lawsuits and fines.

Effective Recovery Methods

Another great reason why you should turn to expert debt recovery solutions is that agents know how to get results. Agents will know to contact debtors, communicate the problem and settle the debts without harming your business’s stellar reputation. 

Access to Skip-Tracing

One of your customers seems like they’ve vanished into thin air after missing a payment. All is not lost. A debt collection agency with a skip-tracing department can help you locate this “missing” customer and contact them for debt collection. 

Prevention of Future Debt Problems

Some debt collection agencies offer pre-collection services. Your business could use these services to encourage customers to make payments on time and avoid delinquency. Some pre-collection services include sending reminders for bill due dates and arranging payment plans for customers who can’t cover a large lump sum. 

Making a debt collection mistake is not worth the risk. Hire a debt collection agency to do the delicate work for you. Getting professional help is never a mistake.