Debts owed by a commercial venture or business is known as commercial debt. As opposed to consumer debt, commercial debt is used to fund business expenses, asset acquisition and improvements. When first starting out, it is generally the norm for businesses to accumulate a great deal of commercial debt. Instead of declaring bankruptcy, commercial debt consolidation, commercial counseling and commercial debt settlement are other options for businesses struggling with debt that is overdue.
The attorneys at ZocLaw.com can assist you in restructuring your business debts if you own a struggling business, by negotiating with your creditors to get rid of a portion of your debt, the attorneys will assist you in working out a manageable repayment plan.
How Do Commercial Debt Collection Agencies Work?
Prior to referring a debtor who is in default to collections, the creditor will attempt to obtain payment from the debtor by itself. Typically, if a debtor does not pay within 90- 120 days, the creditor has 3 options: assign, sue or sell the debt to a commercial debt collection agency.
When a debt is assigned, it means that the creditor may have an agreement with a third party and that the third party has the right to collect on behalf of the original creditor, alternatively it could mean that they have the right to actually keep and collect payment on the debt as opposed to just collecting.
Debt collection agencies that purchase debts do so at a fraction of the amount that is actually owed by the businesses to the creditor, thereafter they take down the business and collect the debt. Collection debt agencies are notoriously aggressive since they only make money if the debtor actually pays. Initially the agency will attempt to contact the debtor via phone and mail. After repeated attempts, if the agency does not receive payment, it may file a lawsuit against the business. The attorneys at ZocLaw.com can assist you, if your business is being pursued by a commercial debt collector, by helping you settle the debt for a fraction of the balance allegedly owed.
The Standards That Commercial Debt Collection Agencies Must Abide By
Unfortunately the Fair Debt Collection Practices Act does not apply to commercial debt collectors. However, this does not mean that the conduct of commercial debt collection agencies are not subject to regulation. The activities of commercial debt collection agencies are governed by the Commercial Collection Agency Association (CCAA). Firms have to abide by high standards of practice and uphold strong ethics in order to become certified members of the CCAA. There are several states that have licensing requirements for commercial collection firms. An application must be submitted by the firm in order to obtain a license, apart from submitting the application, the firm must also purchase a bond, and pay a licensing fee. Renewal of the licenses must be done either every year or every other year. The attorneys at ZocLaw.com are familiar with commercial debt collection laws and can easily identify violations of the law.