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Business Debt/Collection of Business Debts

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Expert: - 4/2/2009


Question
QUESTION:
I have several questions...

1) If a business creditor comes after me personally (LLC - sole member) for business debt, does that mean that FDCPA now applies to the debt?

2) If business debt is not covered by FDCPA, then where do I find specific information on GA fair debt collection practices? (I have searched high and low with no success.)

3) Is it legal for an original creditor to be contacting me at the same time that they have multiple third party collection agencies pursuing me?

4) If a collection agency is calling me 4-10 times a day, is this considered harassment even if I do not answer the call?

5) I have already sent a letter by certified mail requesting validation of the debt and requesting that the collection agency contact me by mail only, yet they continue to call me by phone. To date I have not received validation of the debt. Even if I don't answer the call, is each call considered harassment, and therefore a violation of my rights?

Thank you kindly for your response.


ANSWER: Terri,
1.  No, unless you used your personal credit when applying for the credit line that created the debt. Check your original contract.
2.  FDCPA does not apply to business debts only consumer debts. Check with your Attorney Generals office in your state to see if there are any specific laws pertaining to collecting business debts.
3.  It is not illegal but most collection agencies ask that they don't, but this doesn't mean they won't.
4.  If you don't answer the call, they will keep trying back in order to reach you.  If they were speaking to you 4-10 times a day, that might be considered harassment but you would have to get an attorney since the FDCPA does not apply if it is a business debt.
5.  You mean your business rights if this is a business debt.  Since the FDCPA does not apply, they do not have to follow the guidelines outlined in the FDCPA.  If you feel your business does not owe this debt and you feel as though your business is being unjustly contacted I would seek the counsel of an attorney in this matter.


---------- FOLLOW-UP ----------

QUESTION: I was required to give a personal guarantee in order to open the accounts, and they are now being reported on my personal credit as delinquent. Does that change any of your answers, or am I still not protected by the FDCPA?

Thank you kindly,
Terri

Answer
If you signed a personal guarantee and the business defaults you would be personally responsible for the debt and it can be reported to your personal credit. That is the purpose of a personal guarantee. That does not change the fact that it is a business debt.

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Michelle Dunn

Expertise

As one of the Top 5 Women in Collections, one of the Top 50 Collection Professionals, and winner of the Business Excellence award, I can answer any questions about debt, debt collection, improving business credit, creating a credit policy, enforcing a credit policy and collecting on past due accounts. I can also answer questions in regards to starting a debt collection agency since I have been a bill collector for over 24 years, started and ran my own collection agency for 8 years, and maintain my 12 year old Credit & Collections Association for members of the credit & debt collection industry. I am also the author of the popular and award winning book "Starting a Collection Agency, how to make money collecting money" now on it's 3rd edition. This book has won a the Writers Digest self published award as well as the New York Book Festival Award. I am a repeat contributor to the Wall Street Journal, and have been featured on NPR, CNN, as well as many other national radio and television programs. I have also been featured in national publications such as the Wall Street Journal, Forbes, Smart Money, MSNBC and much more. I have 17 published books to my name and am an accomplished speaker and consultant. I currently write 9 columns for newspapers, magazines and online portals worldwide.

Experience

I have over 24 years experience in debt collection, I started and ran my own collection agency for 8 years and I am the founder & owner of my Credit & Collections Association that I founded in 1998. www.credit-and-collections.com

Organizations
My Credit & Collections Association, I was also a member of the American Collectors Association and Plymouth Chamber of Commerce for 11 years. I am a member of many writing groups as well as my local Women Inspiring Women chapter. I am a member of Know More Media as an expert for their blog on business credit.

Publications
Business NH Magazine, Smart Money Magazine, MSNBC, CNN, Forbes.com, The Wall Street Journal, Home Business Magazine, Entrepreneur Magazine and website, many books, newspapers and television programs as well.

Education/Credentials
I have written 17 books in my collecting money series and one for Entrepreneur Press called the Ultimate Credit and Collections Handbook. My newest book is being published by John Wiley & Sons in May titled, The Guide to Getting Paid, how to weed out bad paying customers, collect on past due balances and avoid bad debt. This book is also being sold to many colleges as a text book.

Awards and Honors
My book Starting a Collection Agency, how to make money collecting money won an award from Writers Digest and the 2007 New York Book Festival in the "How to" category. I have won 2 awards from Dun & Bradstreet and Governor Jean Shaheen. I was nominated as one of the Top 5 Women in Collections twice as well as having been selected as one of Collection Advisor's Top 50 Collection Professionals by my peers.

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