The Kaplan Group

The Truth about Debt Collectors

By Dean Kaplan, CEO and President, The Kaplan Group

When I tell people at parties what I do for a living, I often get a weird look. Sometimes, people move back a step or two, as though I might be a threat. I try not to take it personally.

Generally speaking, there are two main types of debt collectors, commercial and consumer. A commercial debt collector helps companies collect when other companies owe them money. A consumer debt collector pursues debt that individuals owe to companies. These collectors may work for an agency hired by the company that is owed the money or for a company that has purchased the debt and is now collecting for itself.

Of course, businesses are also entitled to pursue money they are owed. Each of these “types” of debt collection is governed by different laws and regulations. The Fair Debt Collection Practices Act (FDCPA) only applies to consumer debt collectors who don’t work directly for the company that is owed money. As a consumer, you need to know your rights under the FDCPA, but you also need to know its limitations. If you owe a business money, simply telling them to stop calling you does not mean that they have to do so.

Different states have different laws and regulations that govern each of these “types” of debt collection. In addition to the different types of debt collectors, If you are owed money and want to collect on your own, make sure you have a good understanding of the legal issues. It is easy to cross lines when you don’t know where the line is.

Anyone Can Collect Debt

Although anyone is entitled to collect on debt they are owed, being a third-party debt collector is different. Most states have strict licensing laws for debt collectors. It’s important to make sure that any debt collector you hire is licensed to do so in the state where the company or individual who owes the money resides. Like any profession, debt collectors also have accrediting organizations.

Good debt collectors need excellent listening and negotiation skills. A good debt collector needs to be persistent and determined while maintaining professional detachment. If your feelings are easily hurt and you worry about rejection, debt collection is not the field for you. Debt collectors also need to be well versed in the laws of collection. 

Debt Collectors Are Rude

The reason people move away from me at parties? Too many businesses lose money because they are reluctant to hire a debt collector. Business owners worry that debt collectors will harass and alienate their clients and cost them business and their reputation.

The truth is that most people find it difficult to remain level-headed when faced with stubborn debtors. When debtors refuse to answer the phone or act unreasonably, it can be easy for business owners or their staff to lose their temper or take a position that is not viable. Business owners have been known to send threatening messages or take to social media to attack the debtor. This can backfire, damage their business instead, and open them to liability that far exceeds what they are owed. Business owners may also be so eager to get the problems solved that they make a bad deal and agree to settlement terms that end up harming them.

Reputable, professional collectors eliminate the risk of these things happening. They are not emotionally involved in the situation and are trained in both the law and negotiation techniques.

Sending a client to debt collection can help you save that client. If someone owes you money, you are unlikely to continue working with them. While they are avoiding your calls, they are also finding other vendors to serve their needs. Because a debt collector can usually solve the problem more quickly than you can on your own, sending the client to collections may resolve the issue. Once the issue is resolved, you may wish to continue working with the client. Not every client who is late on paying one bill needs to be dropped.

It’s true. Some collectors are rude, harass debtors, lie and violate the law. There are bad actors in every profession. No business should want to hire this type of collector. While these are the collectors who get media attention, they represent a small percentage of the over 100,000 people employed in this profession to recover money rightfully owed to the business.

A debt collector is representing your company, so it’s important that you do your research, read reviews of the collector and feel comfortable with the way he or she will behave.

Receiving a phone call from a debt collector is understandably upsetting, as is being owed money by a client. But debt collectors perform an essential service. Debt collectors can help businesses thrive and help clients move out of debt and into solvency. I hope the next time you meet one of us at a party, you won’t be afraid. More important, I hope you’ll reach out to one the next time you are owed money. 

Dean Kaplan is president of The Kaplan Group, a commercial collection agency specializing in large claims and international transactions. He has 35 years of manufacturing, international business leadership and customer service experience. Today, he provides business planning, training and consultation to a variety of global companies.