Avoid violating small business debt collection laws to retrieve old debts

Are you aware of the small business debt collection laws if you’re planning to collect the owed amount? If the answer is no, then you’re required to get more information on it before your debt grows and clients deny to pay the owed amount. Before you start collecting your debt, make sure you give a written notice that collections have begun, within five days when you first contacted the debtor. Make sure the letter is inclusive of the dispute instructions. Here are some of the points that you’re required to know before collecting the small business debt.

1. Debt Collection Law-What are the small business debt collection practices forbidden?

  • You can’t collect the amount beyond the actual debt the clients owe.
  • It may not be possible to continue collection on a debt if the debtor disputes it. You can resume collection only after providing a written proof.
  • You may not be able to contact the debtor if he disputes the debt within 30 days from the date of first contact.
  • You can’t deposit a post dated check before the actual date stated on the check.

2. Debt Collection law- What are the points that the collectors have to disclose while collecting business debt?

  • You need to provide the original name of the debt collector.
  • You can’t pose as an attorney or government officials to retrieve the owed amount.
  • You’re not allowed to threaten the debtor of suing him in the court, unless you actually do it.
  • Can’t accuse a debtor of being a criminal unless you’ve evidence against him.
  • Can’t fake by stating that you’re associated with the credit bureau.
  • You’re required to state the right amount that the debtor owes to you. If you misrepresent the amount, then you can be convicted for violating the collection law.
  • You’re required to send legal form if you’re collecting the owed amount from the debtor.
  • You can’t threaten the debtor of being arrested for nonpayment of debt.
  • If you don’t intend to take legal action against the debtor, then you can’t threaten him/her.

3. Debt Collection Law- How the law prevents third party disclosures?

  • The law forbiddens the debt collector from disclosing any information to a third party.
  • You can’t provide credit related information that is not 100% authentic.
  • You’re not allowed to contact anyone related to the debtor more than once.

4. Debt Collection Law- What are the rules of contacting the debtor?

  • The collection law forbiddens the debt collector from contacting the debtor after 9pm and before 8 am.
  • Try to provide your name as well as the company’s name when you contact the debtor over the phone.
  • Avoid repeated calls as it’s considered as violation of consumer rights.
  • Don’t threaten or abuse the debtor while contacting him to retrieve the owed amount.
  • The law prevents the debt collectors from using obscene or profane language.

5. Debt Collection Law- How a debt collection mail needs to be send?

  • Avoid sending postcards if you’re sending collection mails to the debtors.
  • Faking the debtors by sending a mail that appears to be a government or legal document is a violation of collection laws.
  • Avoid mailing with any reference to debt collection on the exterior of the envelope to avoid legal action against you.

Therefore, you’re required to keep the above mentioned debt collection laws in mind when you plan to collect business debt from the clients. If your clients are unable to pay off the owed amount, then offer debt pay off alternatives to retrieve the owed amount.


I found it interesting how you mentioned how you cannot contact the debtor after certain times and how you can’t repeatedly call them. When I owed money to a past employer, the debt collector made sure to treat me with cordiality and respect, which really helped me out in a stressful time. I will be sure to let others know what rights they have if they ever run into a similar situation.


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