Commercial Debt

How To Deal With Commercial Debt Collection?

Commercial Debt Explained

Any debt that is owed by a corporate venture or business may be described as commercial debt. As opposed to consumer debt, commercial debt is utilized to fund business expenses, asset acquisition and improvements. At the start of a business venture, it is not uncommon for businesses to accumulate substantial commercial debt.

There are alternatives to declaring bankruptcy like commercial debt counseling, commercial debt consolidation , and commercial debt settlement.

Should your business be suffering to pay its corporate debt, the attorneys at, may help you restructure your business debts.

How Do Commercial Debt Collection Agencies Work?

When payment is overdue to a creditor, that creditor will try to obtain payment before handing over the account to collections. If a business does not pay its debt within 90-120 days, the creditor has 3 options available to him or her, namely: assign, sue or sell the debt to a commercial debt collection agency.

With respect to assigning a debt it involves a situation where the creditor may have an agreement with a third party in terms of which the third party has the right to collect on behalf of the original creditor. It could also mean that they could actually collect and keep as opposed to just collect.

The advantage that corporate debt collection agencies have is that they buy debts owed by business to creditors for a fraction of the amount that is actually owed to the creditor and then take it upon themselves to track down the business and collect the debt. However, debt collection agencies only make money if the debtor actually pays, thus they are notoriously aggressive. The debt collection agencies will not hesitate to file a lawsuit against the debtor in the event that the debtor does not pay after being asked to do so by phone and email.

If your business is being hunted down by a commercial debt collection agency, the attorneys at may be able to assist you to settle the debt for a fraction of the balance they claim is owed.

Do Commercial Debt Collection Agencies Have To Abide By Certain Standards?

Debtors are protected from being harassed by the Fair Debt Collection Practices Act (FDCPA). However, this act does not apply to commercial debt collectors. This does not mean that the conduct of corporate debt collectors are not subject to regulation.

The body responsible for the supervision of the activities of debt collection agencies is the Commercial Agency Association (CCAA). Firms must abide by high standards of practice and uphold strong ethics in order to become a certified member of the CCAA.

Apart from this, many states have licensing requirements for commercial collection firms. A firm must submit an application, purchase a bond and pay a licensing fee to obtain a license.

Reducing Your Commercial Debt

Since your original creditor makes far less on the dollar if it chooses to sell your debt to a collection agency, creditors are often willing to negotiate a reduced payment amount before sending your debt to a collection agency. However, there is no obligation on creditors to do this.

At the stage when a debtor or his or her attorney makes an offer that indicates what she/he can realistically afford, negotiations often begin. Naturally, creditors are more likely to accept offers that are as close as possible to the original sum owed. This process can be tricky and it is wise to seek professional representation in the matter.