Differences Between Commercial And Consumer Collections

When a business decides it is time to hire a collection agency, finding the debt collector that can do the job right can be stressful and confusing.The first step in this process requires a business owner to decide between contracting a consumer debt collection agency or a commercial collector. Without an understanding of the difference between these two types of collector, a business owner has little hope of finding the agency that can get their money in an efficient manner. This post will help explain the main differences between these two types of debt collection agency.

Consumer debt collection agencies specialize in collecting debts owed by an individual consumer to a business. These debts include personal credit card debt, medical debt, unpaid mortgage or loan balances, etc. These debt collection agencies are governed by the FDCPA, or Fair Debt Collection Practices Act, an extensive piece of legislature designed to protect consumers who owe money to businesses from unfair and unethical debt collection practices. Collection methods prohibited by this legislation include harassment, threats, or intentional deception (attempting to collect on paid debts or debts that were never owed in the first place). The FDCPA includes many other particular laws aimed at protecting consumers from overly-aggressive debt collection. In many cases, the primary form of contact between consumer collectors and debtors is mailed notices, with telephone communications or emails used as well.

The other type of debt collection is commercial collection. These debt collectors do not collect debts owned by individuals, but rather specialize in collecting debts owed by one business to another. Oftentimes, these debts are for services or products ordered from a supplier of some sort that are never paid for. Commercial debt collectors collect from businesses both small and large; their clients are often businesses in a wide variety of industries. Commercial collectors are not subjected to the FDCPA, although their collection efforts are still governed by other legislation. Aggressive and unethical tactics are still prohibited, but the options available to commercial collectors are often more flexible than those available to consumer collectors. The primary tool of commercial debt collectors is telephone communication; once the business owner or department head in charge of bill payment (depending on the type of business) has been located, collectors make regular calls to try to work out a payment option that both the debtor and the creditor can agree to.

Some agencies perform both types of debt collections, but in order to receive the most effective and efficient service it is usually best to choose an agency that specializes in collecting the type of debt your company needs help with. Specialized agencies employ debt collectors who are very well trained in their debt collection efforts, and are generally more successful in collecting debts in a timely manner than agents who perform both types of debt collection.

Once a business understands the type of debt collection service they need, they should research a number of agencies in order to find the one best suited to their needs.


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