Welcome to the RMS 3rd Party/Financial Services Team
The Management Team’s Commitment:
Throughout your training and your tenure with the RMS 3rd Party/Financial Services team, we are
committed to your success and development. The method that we use to ensure this is the FourStep Training Process:
The Four-Step Training Process (Tell, Show, Do, Review):
We will tell you how to do a job or task by explaining the processes, techniques, systems, tools
and skills you will need to be successful in performing a job or task.
We will show you how to do a task or job by demonstrating the things we expect you to do and
know, or how to do a specific job or task.
We will allow you to do a job or task while we watch and coach you through it.
We will review your performance of the job or task, ensuring you understand each concept, skill,
Further, we expect that you will hold us accountable to this Four-Step Training Process
throughout your training and beyond.
Our Expectation of You:
Always put in your best effort. Ask questions. Hold us accountable to the 4 steps. Be engaged
in your work. And, always act “LME”
Legally – Follow the letter and the spirit of any laws that apply specifically to your job as a
collector for RMS, or generally to your conduct on the job.
Morally – Always try to do what is right, for the team, the company, our clients and yourself.
Ethically – Be an example of best practices in the way you conduct yourself as a collector.
Receivable Management Services & The Collection Industry
The role of the Receivable Management Services Financial Services/Third Party team is to work
with people or businesses that owe debts to our clients. As a debt collector, you will be
responsible for contacting, negotiating payment, and holding debtors accountable for their legal
obligation to our clients.
Debt collection is a vital part of our economy. Efforts of debt collection professionals contribute to
keeping interest rates lower for everyone and support small and large businesses by keeping
their revenue flowing. As a debt collection professional on the Financial Services team, you will
be part of a vital and growing industry.
Credit Card Collections:
The Receivable Management Services – Financial Services Unit specializes in collection of credit
card accounts. Other lines of business include credit union loans, auto loans, over-drafts, and
insufficient check deficiencies.
There are two types of credit card accounts that we may handle on behalf of our clients: Personal
credit cards and business credit cards.
Personal Credit Cards
A personal credit card is a card opened by a consumer for personal, family, or household use.
Credit has been extended by the credit card company based on the personal credit-worthiness of
the applicant. Usually, there is one borrower, and one point of contact that may be made on the
In some cases, either at the request of the consumer, or at the request of the lender, the account
may be in more than one person’s name. Situations that may result in multiple parties to the
same debt are: if there are multiple applicants, the credit card company requires co-maker, or if
the borrower stipulates an authorized user.
At the request of the applicants, two parties may apply for a joint credit card account. For
example, a husband and wife may jointly decide to apply for a credit card. Both spouses are
listed as borrowers and can and should be contacted. Each is equally responsible for payment of
Some applicants may not be credit-worthy to open an account on their own. In those cases, the
lender may require a co-borrower (also called a co-maker) on the file. The co-maker agrees to
take responsibility for payment of the credit card account if the primary borrower fails to fulfill the
terms of the credit card contract. In this situation, both the borrower and co-maker are
responsible for the debt to the credit card company and should be contacted.
Neither of these situations should be confused with an “authorized user,” who is a person
designated by the borrower as having the right to make charges to the account, but is not
responsible for payment of the debt. An example of an authorized user is when a parent requests
a card in their child’s name on their account to be used in emergencies. The minor child would
not be legally responsible for payment of charges (to the credit card company – to their parents is
a different story). In this case, only the borrower may be contacted.
When collecting on personal credit card accounts, the FDCPA must be followed in all
communications with the debtor or with third parties.
Business Credit Cards
A business credit card is a card opened up for the benefit of a business. The contract that
creates the credit card account usually stipulates the purchases made on the card must be for the
Under most circumstances, business credit cards require the cardholder to provide a “personal
guarantee” that if the company fails to pay for the charges made to the card, the card holder will
take responsibility for paying the account personally. This person is called the “Personal
Guarantor” or “PG.” The PG must also be found to be credit-worthy by the credit card company.
Requiring a personal guarantee protects the credit card company from loss if the business does
not pay or closes. It also can be a deterrent from misuse, because the PG bears personal
responsibility for the card, equal to the company, or in some instances greater than the company.
When collecting on business credit card accounts, the FDCPA does not strictly apply. The
FDCPA does not apply at all when contacting the business. There is no confidentiality and you
can speak to anyone. When contacting the PG at home, while the PG is not protected by the
FDCPA, third parties have some rights, and you should therefore stick to the legal hours of
Who are our clients?
RMS has partnered with some of the premier credit card issuers in the world. Among our past
and present relationships are:
JP Morgan Chase Card Services
MBNA/Bank of America
First Equity Credit Card
Various Credit Unions
Who are our competitors?
The credit card collections industry is a competitive marketplace. While there are any number of
collection agencies and law firms specializing in credit card collections, some of our major
competitors include NCO Group, MRS, Associates, and First Credit Services.
What does competition mean? Competition means we always need to be on top of our game.
We need to provide the best results coupled with the best service to retain and grow our
relationships. Each collector is charged with doing their best to collect as much money as
possible and to meet the customers’ requirements, outlined in each client’s “Service Level
Another facet of debt collection is the debt-buyer industry. Companies exist that buy debt for
pennies on the dollar, and then collect on the debt themselves. It is RMS’s policy that we do not
purchase debt. We collect only on behalf of our clients.
On the next page, you will see a flow chart example of how credit card accounts may end up in
third party collections.
The first number of a credit card number tells you what kind of card it is:
• 3 – American Express
• 4 – Visa
• 5 – Mastercard
• 6 – Discover
• 8 – Often denotes a “private label"
To collect the debts placed with us by our clients, we use two main types of communication. Mail
and phone calls. The Fair Debt Collection Practices Act or FDCPA is a law that was drafted by
the U. S. Congress in 1977 and enacted in 1978 that governs consumer debt collection. In
particular, the FDCPA documents guidelines for your phone and mail contact with consumer
All of the letters we use have been drafted by management and approved by our compliance
officer. The letters are drafted to be effective and to be compliant with the FDCPA and state laws
regulating contact by collection agencies with debtors. You will not draft letters, but you will have
the opportunity to use the letters we have programmed in our system. Copies of all of the letters
are located at the end of the manual.
You will be provided with scripting for messages and initial debtor communications. The FDCPA
will outline for you how to legally communicate verbally with a debtor.
You will read and learn to apply the FDCPA.
You will learn about court decisions that have clarified aspects of the FDCPA and how
they relate to you.
You will learn about relevant state laws.
You will learn the Mini-Miranda and its significance.
You will learn how to be compliant with the letter and spirit of the law.
To begin, we will review the FDCPA in its entirety.
SECTION 1 - Collection Law - FDCPA
THE FAIR DEBT COLLECTION PRACTICES ACT
As Amended by Public Law 104-208, 110 Stat. 3009 (Sept. 30, 1996)
Sept. 20, 1977
To amend the Consumer Credit Protection Act to prohibit
abusive practices by debt collectors.
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled,
That the Consumer Credit Protection Act (15
U.S.C. 1601 et seq.) is amended by adding at the end
thereof the following new title:
Consumer Credit Protection Act,
TITLE VIII - DEBT COLLECTION PRACTICES
801. Short title
802. Congressional findings and declaration of purpose
804. Acquisition of location information
805. Communication in connection with debt collection
806. Harassment or abuse
807. False or misleading representations
808. Unfair practices
809. Validation of debts
810. Multiple debts
811. Legal actions by debt collectors
812. Furnishing certain deceptive forms
813. Civil liability
814. Administrative enforcement
815. Reports to Congress by the Commission
816. Relation to State laws
817. Exemption for State regulation
818. Effective date
ß 801. Short Title
This title may be cited as the “Fair Debt Collection
ß 802. Congressional findings and declaration of
(a) There is abundant evidence of the use of abusive,
deceptive, and unfair debt collection practices by
many debt collectors. Abusive debt collection practices
contribute to the number of personal bankruptcies,
to marital instability, to the loss of jobs, and to
invasions of individual privacy.
(b) Existing laws and procedures for redressing these
injuries are inadequate to protect consumers.
(c) Means other than misrepresentation or other abusive
debt collection practices are available for the effective
collection of debts.
(d) Abusive debt collection practices are carried on to a
substantial extent in interstate commerce and through
means and instrumentalities of such commerce. Even
where abusive debt collection practices are purely
intrastate in character, they nevertheless directly affect
(e) It is the purpose of this title to eliminate abusive debt
collection practices by debt collectors, to insure that
those debt collectors who refrain from using abusive
debt collection practices are not competitively disadvantaged,
and to promote consistent State action to
protect consumers against debt collection abuses.
While the FDCPA is a consumer
protection law, a side effect of the
law is to level the playing field for all
ß 803. Definitions
As used in this title-(1) The term “Commission” means the Federal Trade
(2) The term “communication” means the conveying
of information regarding a debt directly or indirectly
to any person through any medium.
(3) The term “consumer” means any natural person
obligated or allegedly obligated to pay any debt.
(4) The term “creditor” means any person who offers
or extends credit creating a debt or to whom a debt
is owed, but such term does not include any person
to the extent that he receives an assignment or
transfer of a debt in default solely for the purpose of
facilitating collection of such debt for another.
(5) The term “debt” means any obligation or alleged
obligation of a consumer to pay money arising out
of a transaction in which the money, property,
insurance or services which are the subject of the
transaction are primarily for personal, family, or
household purposes, whether or not such obligation
has been reduced to judgment.
(6) The term “debt collector” means any person who
uses any instrumentality of interstate commerce or
the mails in any business the principal purpose of
which is the collection of any debts, or who regularly
collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed
or due another. Notwithstanding the exclusion
provided by clause (F) of the last sentence of this
paragraph, the term includes any creditor who, in
the process of collecting his own debts, uses any
name other than his own which would indicate that
a third person is collecting or attempting to collect
such debts. For the purpose of section 808(6), such
term also includes any person who uses any instrumentality
of interstate commerce or the mails in any
business the principal purpose of which is the
enforcement of security interests. The term does not
(A) any officer or employee of a creditor while, in
the name of the creditor, collecting debts for such
(B) any person while acting as a debt collector for
another person, both of whom are related by
common ownership or affiliated by corporate
Types of Communication:
Term # 5 is the part that tells us that
businesses are not protected by the
FDCPA. In order for a debt to be
considered a consumer debt, it must
be incurred for personal, family, or
control, if the person acting as a debt collector
does so only for persons to whom it is so related
or affiliated and if the principal business of such
person is not the collection of debts;
(C) any officer or employee of the United States or
any State to the extent that collecting or attempting
to collect any debt is in the performance of
his official duties;
(D) any person while serving or attempting to serve
legal process on any other person in connection
with the judicial enforcement of any debt;
(E) any nonprofit organization which, at the request
of consumers, performs bona fide consumer
credit counseling and assists consumers in the
liquidation of their debts by receiving payments
from such consumers and distributing such
amounts to creditors; and
(F) any person collecting or attempting to collect
any debt owed or due or asserted to be owed or
due another to the extent such activity (i) is
incidental to a bona fide fiduciary obligation or a
bona fide escrow arrangement; (ii) concerns a
debt which was originated by such person;
(iii) concerns a debt which was not in default at
the time it was obtained by such person; or
(iv) concerns a debt obtained by such person as a
secured party in a commercial credit transaction
involving the creditor.
(7) The term “location information” means a
consumer’s place of abode and his telephone number
at such place, or his place of employment.
(8) The term “State” means any State, territory, or
possession of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, or any political
subdivision of any of the foregoing.
Creditors that collect using a different
name than their regular DBA name
known to consumers are bound by the
The Original Creditor is not bound by
the FDCPA if they are collecting debt
on their own behalf.
Example: Dell Computer vs. Dell
Financial Services. Dell Computer is
the entity that builds and sells
computers. DFS is the entity that
maintains the lease contract payments
and financing agreements. DFS is
bound by the FDCPA when collecting
debts on behalf of computers
purchased from Dell Computer.
ß 804. Acquisition of location information
Any debt collector communicating with any person
other than the consumer for the purpose of acquiring
location information about the consumer shall:
(1) identify himself, state that he is confirming or
correcting location information concerning the
consumer, and, only if expressly requested, identify
(2) not state that such consumer owes any debt;
(3) not communicate with any such person more than
once unless requested to do so by such person or
unless the debt collector reasonably believes that the
earlier response of such person is erroneous or
incomplete and that such person now has correct or
complete location information;
(4) not communicate by post card;
(5) not use any language or symbol on any envelope or
in the contents of any communication effected by
the mails or telegram that indicates that the debt
collector is in the debt collection business or that
the communication relates to the collection of a
(6) after the debt collector knows the consumer is
represented by an attorney with regard to the subject
debt and has knowledge of, or can readily ascertain,
such attorney’s name and address, not communicate
with any person other than that attorney, unless the
attorney fails to respond within a reasonable period
of time to the communication from the debt collector.
“Location Information” is defined by the
Place of Abode
Place of Employment
You may not request any other
information from a third party.
In debt collection, a third party is any
person or entity that is not a party to
the debt. Just like we are a third party
collection agency to our client, a
neighbor, child, employer or other
person is a third party to a consumer’s
debt. You cannot disclose any
information about a debt to a third
party without the express permission
of the debtor.
If a debtor has attorney representation,
you must update their records so that
the address and phone number are
directed to the attorney. YOU MUST
DOCUMENT THE DEBTOR’S
CONTACT INFO IN THE NOTES.
ß 805. Communication in connection with debt
(a) COMMUNICATION WITH THE CONSUMER
GENERALLY. Without the prior consent of the
consumer given directly to the debt collector or the
express permission of a court of competent jurisdiction,
a debt collector may not communicate with a
consumer in connection with the collection of any
(1) at any unusual time or place or a time or place
known or which should be known to be inconvenient
to the consumer. In the absence of knowledge
of circumstances to the contrary, a debt collector
shall assume that the convenient time for
communicating with a consumer is after 8 o’clock
antimeridian and before 9 o’clock postmeridian,
local time at the consumer’s location;
(2) if the debt collector knows the consumer is
Represented by an attorney with respect to such debt
And has knowledge of, or can readily ascertain, such
attorney’s name and address, unless the attorney
fails to respond within a reasonable period of time
to a communication from the debt collector or
unless the attorney consents to direct communication
with the consumer; or
(3) at the consumer’s place of employment if the debt
collector knows or has reason to know that the
consumer’s employer prohibits the consumer from
receiving such communication.
(b) COMMUNICATION WITH THIRD PARTIES.
Except as provided in section 804, without the prior
consent of the consumer given directly to the debt
collector, or the express permission of a court of
competent jurisdiction, or as reasonably necessary to
effectuate a postjudgment judicial remedy, a debt
collector may not communicate, in connection with the
collection of any debt, with any person other than a
consumer, his attorney, a consumer reporting agency if
otherwise permitted by law, the creditor, the attorney
of the creditor, or the attorney of the debt collector.
(c) CEASING COMMUNICATION. If a consumer
notifies a debt collector in writing that the consumer
refuses to pay a debt or that the consumer wishes the
debt collector to cease further communication with the
consumer, the debt collector shall not communicate
further with the consumer with respect to such debt, except:
The legal hours that you may contact a
debtor are from 8am to 9pm in the
debtor’s local time.
YOU ARE RESPONSIBLE TO KNOW
WHAT TIME IT IS WHERE THE
What does “Inconvenient” mean?
A “reasonable” period of time for an
attorney to respond to you is usually
30 days, unless there is a time
sensitive issue that requires immediate
OUR POLICY IS THAT YOU MUST
PROVIDE THE ATTORNEY WITH A
DEADLINE TO RETURN YOUR CALL
BEFORE CONTACTING THE
(1) to advise the consumer that the debt collector’s
further efforts are being terminated;
(2) to notify the consumer that the debt collector or
creditor may invoke specified remedies which are
ordinarily invoked by such debt collector or creditor;
(3) where applicable, to notify the consumer that the
debt collector or creditor intends to invoke a specified
If such notice from the consumer is made by mail,
notification shall be complete upon receipt.
(d) For the purpose of this section, the term “consumer”
includes the consumer’s spouse, parent (if the consumer
is a minor), guardian, executor, or administrator.
While the FDCPA legally allows you to
contact the debtor one additional time
after receiving a “Cease & Desist”
letter, our policy is that once a letter is
received, YOU MAY NOT CONTACT
THEM AGAIN. If additional contact is
necessary, it will be handled by
If a debtor uses the words “Cease &
Desist” verbally over the phone,
discuss the situation with your
manager before proceeding.
ß 806. Harassment or abuse
A debt collector may not engage in any conduct the
natural consequence of which is to harass, oppress, or
abuse any person in connection with the collection of a
debt. Without limiting the general application of the
foregoing, the following conduct is a violation of this
(1) The use or threat of use of violence or other criminal
means to harm the physical person, reputation, or
property of any person.
(2) The use of obscene or profane language or language
the natural consequence of which is to abuse
the hearer or reader.
(3) The publication of a list of consumers who allegedly
refuse to pay debts, except to a consumer
reporting agency or to persons meeting the requirements
of section 603(f) or 604(3)1 of this Act.
(4) The advertisement for sale of any debt to coerce
payment of the debt.
(5) Causing a telephone to ring or engaging any person
in telephone conversation repeatedly or continuously
with intent to annoy, abuse, or harass any
person at the called number.
(6) Except as provided in section 804, the placement
of telephone calls without meaningful disclosure of
the caller’s identity.
Harassment is not defined by the
HARASSMENT IS DEFINED BY THE
CONSUMER. ANYTHING THAT
MAKES A PERSON FEEL
HARASSED COULD BE
The list of harassing behaviors listed
here in the FDCPA is not exhaustive
and is intended only to exemplify the
types of behavior that could be
ß 807. False or misleading representations
A debt collector may not use any false, deceptive, or
misleading representation or means in connection with
the collection of any debt. Without limiting the general
application of the foregoing, the following conduct is a
violation of this section:
(1) The false representation or implication that the
debt collector is vouched for, bonded by, or affiliated
with the United States or any State, including
the use of any badge, uniform, or facsimile thereof.
(2) The false representation of:
(A) the character, amount, or legal status of any
(B) any services rendered or compensation which
may be lawfully received by any debt collector
for the collection of a debt.
(3) The false representation or implication that any individual
is an attorney or that any communication is from
(4) The representation or implication that nonpayment
of any debt will result in the arrest or imprisonment
of any person or the seizure, garnishment, attachment,
or sale of any property or wages of any person
unless such action is lawful and the debt collector or
creditor intends to take such action.
(5) The threat to take any action that cannot legally be
taken or that is not intended to be taken.
(6) The false representation or implication that a sale,
referral, or other transfer of any interest in a debt
shall cause the consumer to:
(A) lose any claim or defense to payment of the
(B) become subject to any practice prohibited by
(7) The false representation or implication that the
consumer committed any crime or other conduct in
order to disgrace the consumer.
(8) Communicating or threatening to communicate to
any person credit information which is known or
which should be known to be false, including the
failure to communicate that a disputed debt is
(9) The use or distribution of any written communication
which simulates or is falsely represented to be a
document authorized, issued, or approved by any
court, official, or agency of the United States or any
Refusing to identify yourself and/or the
company you work for is a violation of
the FDCPA unless you are dealing
with a third party as defined in section
804. Remember, if you are talking to
someone who is not the debtor or the
debtor’s spouse, you need only identify
yourself by name unless you are
expressly asked the name of your
Follow this simple rule:
ONLY STATE WHAT YOU KNOW IS
Inflating the balance of a debt to settle
for the actual balance.
While you can’t threaten any action
that can’t legally be taken, you can be
honest about possible actions our
client might take.
- My client could be protected via the
equity in your house.
- You are employed in a wage
Putting the Scales of Justice on
envelopes or letterhead would be
considered misrepresentation to imply
State, or which creates a false impression as to its
source, authorization, or approval.
(10) The use of any false representation or deceptive
means to collect or attempt to collect any debt or to
obtain information concerning a consumer.
(11) The failure to disclose in the initial written communication
with the consumer and, in addition, if the
initial communication with the consumer is oral, in that
initial oral communication, that the debt collector is
attempting to collect a debt and that any information
obtained will be used for that purpose, and the failure to
disclose in subsequent communications that the
communication s from a debt collector, except that this
paragraphshall not apply to a formal pleading made in
connection with a legal action.
(12) The false representation or implication that accounts
have been turned over to innocent purchasers
(13) The false representation or implication that
documents are legal process.
(14) The use of any business, company, or organization
name other than the true name of the debt
collector’s business, company, or organization.
(15) The false representation or implication that
documents are not legal process forms or do not
require action by the consumer.
(16) The false representation or implication that a debt
collector operates or is employed by a consumer
reporting agency as defined by section 603(f) of this Act.
MAKE SURE TO GIVE THE MINIMIRANDA!!!!
EXAMPLES (of misleading
Use of “Docket #” or year
before claim # such as 05255123456-US
Use of “…and Associates” in
Advising the debtor to
disregard the letter they
received that advises them
of the legal right to dispute a
ß 808. Unfair practices
A debt collector may not use unfair or unconscionable
means to collect or attempt to collect any debt. Without
limiting the general application of the foregoing, the
following conduct is a violation of this section:
(1) The collection of any amount (including any
interest, fee, charge, or expense incidental to the
principal obligation) unless such amount is expressly
authorized by the agreement creating the
debt or permitted by law.
(2) The acceptance by a debt collector from any person
of a check or other payment instrument postdated by
more than five days unless such person is notified in
writing of the debt collector’s intent to deposit such
check or instrument not more than ten nor less than
three business days prior to such deposit.
(3) The solicitation by a debt collector of any postdated
check or other postdated payment instrument
for the purpose of threatening or instituting criminal
(4) Depositing or threatening to deposit any postdated
check or other postdated payment instrument prior
to the date on such check or instrument.
(5) Causing charges to be made to any person for
communications by concealment of the true propose
of the communication. Such charges include, but are
not limited to, collect telephone calls and telegram
(6) Taking or threatening to take any nonjudicial action
to effect dispossession or disablement of property
(A) there is no present right to possession of the
property claimed as collateral through an enforceable
(B) there is no present intention to take possession
of the property; or
(C) the property is exempt by law from such
Dispossession or disablement.
(7) Communicating with a consumer regarding a debt
by post card.
(8) Using any language or symbol, other than the debt
collector’s address, on any envelope when communicating
with a consumer by use of the mails or by
telegram, except that a debt collector may use his
business name if such name does not indicate that
he is in the debt collection business.
EXAMPLE (of unfair practices)
A woman tells a collector not to
discuss the debt with her husband
because he will hurt her. The collector
threatens to tell the husband to get her
EXAMPLE (of unfair practices)
A collector changes the date on a
post-dated check to meet a budget
What about cell phones? They weren’t
in use when the FDCPA was written.
EXAMPLE (of unfair practices)
A threat to lien or remove property
such as a home or car when they
aren’t related to the debt is not
We can identify ourselves as RMS but
we cannot use Receivable
Management Services. The initials
could stand for anything.
ß 809. Validation of debts
(a) Within five days after the initial communication with a
consumer in connection with the collection of any debt, a
debt collector shall, unless the following information is
contained in the initial communication or the consumer has
paid the debt, send the consumer a written notice containing:
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty
days after receipt of the notice, disputes the validity
of the debt, or any portion thereof, the debt will be
assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt
collector in writing within the thirty-day period that
the debt, or any portion thereof, is disputed, the debt
collector will obtain verification of the debt or a
copy of a judgment against the consumer and a copy
of such verification or judgment will be mailed to
the consumer by the debt collector; and
(5) a statement that, upon the consumer’s written
request within the thirty-day period, the debt collector
will provide the consumer with the name and
address of the original creditor, if different from the
(b) If the consumer notifies the debt collector in writing
within the thirty-day period described in subsection (a)
that the debt, or any portion thereof, is disputed, or
that the consumer requests the name and address of the
original creditor, the debt collector shall cease collection
of the debt, or any disputed portion thereof, until
the debt collector obtains verification of the debt or
any copy of a judgment, or the name and address of
the original creditor, and a copy of such verification or
judgment, or name and address of the original creditor,
is mailed to the consumer by the debt collector.
(c) The failure of a consumer to dispute the validity of a debt
under this section may not be construed by any court as an
admission of liability by the consumer.
ß 810. Multiple debts
If any consumer owes multiple debts and makes any
single payment to any debt collector with respect to such
debts, such debt collector may not apply such payment to
any debt which is disputed by the consumer and, where
applicable, shall apply such payment in accordance with
the consumer’s directions.
A debt validation letter is sent to each
debtor upon receipt of the file from the
client and before it is forwarded to you
Debtors will often try to tell you that
you are required to provide them with
copies of bills, statements, or
contracts. Legally, we are not required
to provide that documentation. Clues
that a debtor is using this as a stall
tactic are requests for multiple
statements, copies of other
correspondence, or copies of
documents that do not relate to the
Debtor payments must be applied as
EXAMPLE: Collector is working a
credit card with 30% fee and an auto
loan with 50% fee for the same debtor.
The auto loan is disputed. Payments
for the CC can’t be applied to the auto
loan to get a higher fee.
ß 811. Legal actions by debt collectors
(a) Any debt collector who brings any legal action on a
debt against any consumer shall:
(1) in the case of an action to enforce an interest in
real property securing the consumer’s obligation,
bring such action only in a judicial district or similar
legal entity in which such real property is located; or
(2) in the case of an action not described in paragraph
one, bring such action only in the judicial district or
similar legal entity:
(A) in which such consumer signed the contract
sued upon; or
(B) in which such consumer resides at the
Commencement of the action.
(b) Nothing in this title shall be construed to authorize
the bringing of legal actions by debt collectors.
ß 812. Furnishing certain deceptive forms
(a) It is unlawful to design, compile, and furnish any
form knowing that such form would be used to create
the false belief in a consumer that a person other than
the creditor of such consumer is participating in the
collection of or in an attempt to collect a debt such
consumer allegedly owes such creditor, when in fact
such person is not so participating.
(b) Any person who violates this section shall be liable to the
same extent and in the same manner as a debt collector is
liable under section 813 for failure to comply with a
provision of this title.
ß 813. Civil liability
(a) Except as otherwise provided by this section, any
debt collector who fails to comply with any provision
of this title with respect to any person is liable to such
person in an amount equal to the sum of:
(1) any actual damage sustained by such person as a
result of such failure;
(2) (A) in the case of any action by an individual, such
additional damages as the court may allow, but not
exceeding $1,000; or
(B) in the case of a class action, (i) such amount for
each named plaintiff as could be recovered under
subparagraph (A), and (ii) such amount as the court
may allow for all other class members, without
regard to a minimum individual recovery, not to
exceed the lesser of $500,000 or 1 per centum of the
net worth of the debt collector; and
(3) in the case of any successful action to enforce the
foregoing liability, the costs of the action, together
with a reasonable attorney’s fee as determined by
the court. On a finding by the court that an action
under this section was brought in bad faith and for
the purpose of harassment, the court may award to
the defendant attorney’s fees reasonable in relation
to the work expended and costs.
(b) In determining the amount of liability in any action
under subsection (a), the court shall consider, among
other relevant factors:
(1) in any individual action under subsection (a)(2)(A),
the frequency and persistence of noncompliance by
the debt collector, the nature of such noncompliance,
and the extent to which such noncompliance was
(2) in any class action under subsection (a)(2)(B), the
frequency and persistence of noncompliance by the
debt collector, the nature of such noncompliance,
the resources of the debt collector, the number of
persons adversely affected, and the extent to which
the debt collector’s noncompliance was intentional.
(c) A debt collector may not be held liable in any action
brought under this title if the debt collector shows by a
preponderance of evidence that the violation was not
intentional and resulted from a bona fide error notwithstanding
the maintenance of procedures reasonably
adapted to avoid any such error.
(d) An action to enforce any liability created by this title
Damage awards are determined by:
1. Actual Damages
2. Maximum $1000 for an individual
3. Maximum $500,000 for a class
4. Attorney Fees
Factors considered in determining the
amount of liability in an FDCPA civil
1. Frequency & Persistence
2. Nature of offense
3. The extent to which the offense was
An individual can be held personally
liable unless a “preponderance of the
evidence” proves the violation was not
intended and was not the result of
carelessness. FOR EXAMPLE: A debt
collector contacts a bankrupt debtor.
Appropriate steps had been taken
(Banko/Lexis Nexis) to identify
bankruptcies. (AKA – BONA FIDE
may be brought in any appropriate United States
district court without regard to the amount in controversy,
or in any other court of competent jurisdiction,
within one year from the date on which the violation
(e) No provision of this section imposing any liability
shall apply to any act done or omitted in good faith in
conformity with any advisory opinion of the Commission,
notwithstanding that after such act or omission
has occurred, such opinion is amended, rescinded, or
determined by judicial or other authority to be invalid
for any reason.
An error with the automatic dialer
system causes 1000 California
accounts to be called at 5am. Is this a
violation and if so, to what extent? If
not, why not?
ß 814. Administrative enforcement
(a) Compliance with this title shall be enforced by the
Commission, except to the extend that enforcement of
the requirements imposed under this title is specifically
committed to another agency under subsection
(b). For purpose of the exercise by the Commission of
its functions and powers under the Federal Trade
Commission Act, a violation of this title shall be deemed an
unfair or deceptive act or practice in violation of that Act.
All of the functions and powers of the Commission under
the Federal Trade Commission Act are available to the
Commission to enforce compliance by any person with
this title, irrespective of whether that person is engaged in
commerce or meets any other jurisdictional tests in the
Federal Trade Commission Act, including the power to
enforce the provisions of this title in the same manner as if
the violation had been a violation of a Federal Trade
Commission trade regulation rule.
(b) Compliance with any requirements imposed under
this title shall be enforced under(1) section 8 of the Federal
Deposit Insurance Act, in the case of:
(A) national banks, by the Comptroller of the
(B) member banks of the Federal Reserve System
(other than national banks), by the Federal Reserve
(C) banks the deposits or accounts of which are
insured by the Federal Deposit Insurance Corporation
(other than members of the Federal Reserve
System), by the Board of Directors of the
Federal Deposit Insurance Corporation;
(2) section 5(d) of the Home Owners Loan Act of
1933, section 407 of the National Housing Act, and
sections 6(i) and 17 of the Federal Home Loan Bank
Act, by the Federal Home Loan Bank Board (acting
directing or through the Federal Savings and Loan
Insurance Corporation), in the case of any institution
subject to any of those provisions;
(3) the Federal Credit Union Act, by the Administrator
of the National Credit Union Administration with
respect to any Federal credit union;
(4) subtitle IV of Title 49, by the Interstate Commerce
Commission with respect to any common carrier
subject to such subtitle;
(5) the Federal Aviation Act of 1958, by the Secretary of
Transportation with respect to any air carrier or any
foreign air carrier subject to that Act; and
(6) the Packers and Stockyards Act, 1921 (except as
provided in section 406 of that Act), by the Secretary
of Agriculture with respect to any activities
subject to that Act.
(c) For the purpose of the exercise by any agency referred
to in subsection (b) of its powers under any Act referred
to in that subsection, a violation of any requirement
imposed under this title shall be deemed to be a
violation of a requirement imposed under that Act. In
addition to its powers under any provision of law
specifically referred to in subsection (b), each of the
agencies referred to in that subsection may exercise,
for the purpose of enforcing compliance with any
requirement imposed under this title any other authority
conferred on it by law, except as provided in
(d) Neither the Commission nor any other agency referred
to in subsection (b) may promulgate trade
regulation rules or other regulations with respect to the
collection of debts by debt collectors as defined in this
ß 815. Reports to Congress by the Commission
(a) Not later than one year after the effective date of this
title and at one-year intervals thereafter, the Commission
shall make reports to the Congress concerning the
administration of its functions under this title, including
such recommendations as the Commission deems
necessary or appropriate. In addition, each report of
the Commission shall include its assessment of the
extent to which compliance with this title is being achieved
and a summary of the enforcement actions taken by the
Commission under section 814 of this title.
(b) In the exercise of its functions under this title, the
Commission may obtain upon request the views of any other
Federal agency which exercises enforcement functions
under section 814 of this title.
ß 816. Relation to State laws
This title does not annul, alter, or affect, or exempt
any person subject to the provisions of this title from
complying with the laws of any State with respect to debt
collection practices, except to the extent that those laws
are inconsistent with any provision of this title, and then
only to the extent of the inconsistency. For purposes of
this section, a State law is not inconsistent with this title
if the protection such law affords any consumer is greater
than the protection provided by this title.
Where a conflict exists between the
FDCPA and a state law, the one that
gives the most protection to the
ß 817. Exemption for State regulation
The Commission shall by regulation exempt from the
requirements of this title any class of debt collection
practices within any State if the Commission determines
that under the law of that State that class of debt collection
practices is subject to requirements substantially
similar to those imposed by this title, and that there is
adequate provision for enforcement.
ß 818. Effective date
This title takes effect upon the expiration of six
months after the date of its enactment, but section 809
shall apply only with respect to debts for which the initial
attempt to collect occurs after such effective date.
Approved September 20, 1977
Public Law 95-109 [H.R. 5294]
HOUSE REPORT No. 95-131
(Comm. on Banking, Finance, and Urban Affairs).
SENATE REPORT No. 95-382
(Comm. on Banking, Housing, and Urban Affairs).
CONGRESSIONAL RECORD, Vol. 123 (1977):
Apr. 4, considered and passed House.
Aug. 5, considered and passed Senate, amended.
Sept. 8, House agreed to Senate amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS,
Vol. 13, No. 39:
Sept. 20, Presidential statement.
SECTION 621, SUBSECTIONS (b)(3), (b)(4) and (b)(5) were amended to
transfer certain administrative enforcement responsibilities, pursuant to Pub. L.
95-473, ß 3(b), Oct. 17, 1978. 92 Stat. 166; Pub. L. 95-630, Title V. ß 501,
November 10, 1978, 92 Stat. 3680; Pub. L. 98-443, ß 9(h), Oct. 4, 1984, 98
SECTION 803, SUBSECTION (6), defining “debt collector,” was
amended to repeal the attorney at law exemption at former Section (6)(F)
and to redesignate Section 803(6)(G) pursuant to Pub. L. 99-361, July 9,
1986, 100 Stat. 768. For legislative history, see H.R. 237, HOUSE REPORT
No. 99-405 (Comm. on Banking, Finance and Urban Affairs).
CONGRESSIONAL RECORD: Vol. 131 (1985): Dec. 2, considered and
passed House. Vol. 132 (1986): June 26, considered and passed Senate.
SECTION 807, SUBSECTION (11), was amended to affect when debt
collectors must state (a) that they are attempting to collect a debt and (b) that
information obtained will be used for that purpose, pursuant to Pub. L. 104-208
ß†2305, 110 Stat. 3009 (Sept. 30, 1996).
SECTION 2 - Collection Law – COURT RULINGS
The following are court rulings that have clarified the FDCPA. You should be
aware of these, as you will most likely encounter a situation to which one or more
Brady v. Credit Recovery Company - The Brady Decision states that a debtor
does not have to dispute a debt in writing as the original language of the FDCPA
states. If you have any reason to know or suspect that it is disputed, you must
communicate the dispute to the creditor.
How does this apply to you?
The FDCPA states that a debtor must dispute a debt in writing. This ruling
lessens the requirement so that you must document an account as disputed
regardless of how you are notified. A debtor only need tell you they dispute the
debt. That said, the dispute must be meaningful. In other words, if a debtor
disputes a debt, they must also tell you why the debt is disputed. If no reason is
given, the creditor cannot remedy the situation.
Chaudhry v. Gallerizo - States that “consistent with legislative history, verification
[debt validation] is only intended to eliminate the…problem of debt collectors
dunning the wrong person or attempting to collect debt which the consumer has
already paid. There is no concomitant obligation to forward copies of bills or
other detailed evidence of the debt.”
How does this apply to you?
You will probably run into debtors that will tell you that they will not pay or
consider payment of their debt without stacks of papers proving the debt. This is
why we say in the talk-off “Are you familiar with this?” Should you encounter a
debtor that claims knowledge of the FDCPA and a right to require you to provide
an unreasonable amount of documents to them, I would invite you to read the
above text verbatim to them. Furthermore, a consumer is obligated to maintain
their own financial records.
SECTION 3 - Collection Law – TIME ZONES & COMPLIANCE
The FDCPA defines appropriate times to call a consumer debtor as 8:00 am to 9:00 pm in the
debtor’s time zone. Below is a map of the US showing the time zones.
For your purposes this applies as follows:
At 8am you can begin calling Eastern time zone accounts. You must stop by
At 9am you can begin calling Central time zone accounts. You must stop by
At 10am you can begin calling Mountain time zone accounts. You must stop by
At 11am you can begin calling Pacific time zone accounts. You must stop by 12
At 12 noon you can begin calling Alaska accounts. You must stop by 1am.
The two most common time zone errors are the Florida Panhandle (area code 850) and El Paso,
TX (area code 915). These two small areas are in a different time zone from the rest of their
states. Look for other states that may be split between two time zones.
Some states do not observe daylight savings time in the typical “Spring Forward/Fall Back”
fashion. The following are the states and how their time works:
Indiana - During the winter, the time is the same as Eastern. During the summer,
the time is the same as Central. (The extreme west of Indiana is Central time
zone and does observe daylight savings time).
Arizona - During the winter, the time is the same as Mountain. During the
summer, the time is the same as Pacific.
Hawaii - During the winter, Hawaii is 5 hours behind us. During the summer,
Hawaii is 6 hours behind us.
SECTION 4 - Collection Law – COMPLIANT ACTIVITY
Review the following actions or behaviors and identify if they are compliant with the FDCPA or
not. Cite the page and article of the FDCPA that supports your answer.
1. Collector tells a debtor their car can be re-possessed to pay off a credit card debt.
2. Collector tells a debtor their car can be re-possessed to pay off their secured auto-loan.
3. Collector calls a debtor’s neighbor to ask for location information.
4. Collector calls a debtor’s neighbor and asks them to leave a note for the debtor on their
5. Collector calls the debtor at work and leaves a detailed message regarding the debt with
6. Collector tells a debtor that if they do not pay voluntarily, the collector will contact their
employer to have the funds taken out of their paycheck.
7. Collector calls a debtor at work and tells them that they are a debt collector, and any
information obtained will be used for that purpose.
8. Collector calls a debtor and advises that the collector refuses to work with the debtor’s
9. Collector makes an initial call to a debtor at 8am in their time zone and the debtor advises
them not to call that early any more.
10. Collector calls debtor named “Joe Smith.” A woman answers the phone and identifies
herself as Mrs. Smith. Collector learns later it was the debtor’s girlfriend, not his wife.
11. Collector tells a debtor an attorney will review their file for possible legal remedies to be
taken against them.
12. A collector calls a debtor at the number provided by the client. The debtor requests no
more calls to that number because it is a pre-paid cell phone and they are charged for the
minutes. The collector persists stating that unless the debtor provides an alternate
number, we must call the cell phone.
13. A collector leaves a message at a debtor’s home and advises he is calling from
Receivable Management Services on the voice mail.
14. A consumer disputes a debt verbally. The collector tries to work through the objection
and collect the undisputed portion of the debt, and updates the file as partially disputed.
15. A debtor hangs up on a collector. The collector schedules a follow up call for 2 business
SECTION 5 - Collection Law – STATE LAWS
In addition to protection granted by the federal government through the FDCPA, some states
have similar laws. As stated in the FDCPA, when the state law and federal law are conflicted, the
one that prevails is the one that provides the most protection to the consumer.
Here are some examples of state laws that you must adhere to on a case by case basis:
Solicitation of Post-Dated Checks/Check by Phone
It is illegal to SOLICIT a post dated check from a consumer debtor residing in
Massachusetts. However, you may ACCEPT one if offered. You may want to
use language such as the following:
“…for your protection, your state does not allow me to ask you to send a post-dated check.
However, if you wanted to offer one, I would be able to accept it. Now, how do you plan to
resolve this debt?”
“For your convenience, we offer the following payment options: You may mail a check, submit
payment via Western Union, or you may authorize a check over the phone for today or a date of
It is illegal to charge a fee for processing a check-by-phone for debtors residing
in the state of Iowa. EVEN IF THE CLIENT ALLOWS IT, YOU MAY NOT
CHARGE A FEE TO IOWA DEBTORS.
Collecting Past Statute The “Statue of Limitations” on a debt is the time after which either the
remedies available to recover a debt are limited, or you are barred from pursuing the debt at all.
There are two types of “Statutes of Limitations.” In most states, after the statute expires you can
pursue the debt, but the court either will not hear the case due to the length of time that has
passed or the debtor can raise the time limit as a defense for non-payment. The second type of
statute of limitations is “claim invalidating” which means that you are not only prohibited from
suing the debtor, you may not contact them or attempt to collect the debt in any way. Collecting
past statute is illegal in the states of:
Spousal Contact Restrictions
The following states have restrictions on discussing a debt with a debtor’s spouse.
Only with written permission from the debtor
One time only & only after 30 days with debtor contact
Requires debtor permission
Yes, but a maximum of 3 times per week.
DC, Hawaii, Illinois, Maine, Massachusetts: No spousal contact allowed
The following states have special restrictions on calling. See the statute of limitations sheet (next
page) for the specific details:
SECTION 5 - Collection Law – STATUTES OF LIMITATIONS & OTHER STATE GUIDELINES
Spousal Contact? Calling restrictions?
1x / Day, 2x / 7 days
YES, if written
perm. from debtor 1 x / Day
YES, if perm. from
YES, 1x only!! Must
be after 30 days w/
no debtor contact
1 x / Day, 5 x / 7 Days
1 x / Day, 5 x / 7 Days
HO: 3x/ 7 Days
POE: 1x/ 7 Days
(Credit & Charge Cards)
** An expired Statute of Limitations only means that we cannot pursue legal remedies to recover the debt. The debtor still owes
the debt in all states except Wisconsin & Mississippi. It is illegal to collect past statute in WI & MS.
SECTION 6 - Collection Law – COMMERCIAL ACCOUNTS
The FDCPA does not apply to commercial debtors. Often commercial debtors will try to invoke
rights under the FDCPA to which they are not entitled. The FDCPA is intended to protect
consumers from egregious tactics by collection agencies or big businesses, assuming that the
consumer does not have the business savvy that a collector or other business person would. The
FDCPA defines a consumer as “any natural person that owes or allegedly owes money” and that
debt is “for personal, family, or household use.” Business people are expected to have some
level of competence to handle the affairs of the business, therefore, the playing field between a
business and a collection agency is a level one and no special protection is given.
Debt Validation - Commercial debtors may claim a right to debt validation under the FDCPA.
Legally, we are not bound to provide validation for a commercial debt. Do not dismiss this
request too quickly. Probe further to find out why your contact is requesting it. Is it a stall tactic,
or a genuine request for information?
You’ll be able to tell if it is a stall tactic if you see record in the account history that the proof has
been provided previously, or if there are prior payments made to RMS or to the client. If they
don’t know the debt, ask them who was making the payments. If information has been provided
previously to someone within the company, refer them to that person. Repeated requests for
information of this type, or an original request for mountains of documents are an obvious stall
tactic and should be handled as such.
If there is no history of live contact, find out more about their business process. The debtor
company may not have record of having done business with the client previously. It is also
possible that the personal guarantor was responsible for submitting the invoices to be paid, and
neglected to do so. In this case, you may need to request invoices or a contract to prove the
obligation and expedite payment.
Cease & Desist - A business may send a letter or verbally request for you to “Cease & Desist”
but this is a right afforded only to consumers. Advise the debtor that this right applies only to
consumers, and you are within your rights to contact them in the normal course of business.
Should they choose not to cooperate with you, you will be forced to recommend further action be
taken against the business. Even if the debtor is a personal guarantor, because the debt is a
business debt, you have a right to contact them in the normal course of business and we are not
obligated to abide by a “Cease & Desist” request.
30 Days to Dispute/Overshadowing - A business debtor may tell you that they have 30 days to
review their files to determine if they will file a dispute. Again, this is a right afforded to
consumers only. If a commercial debtor claims the debt is disputed, advise them that the time to
dispute the debt was prior to placement with our office, and further, if the dispute had merit, it
would not have been sent to us. Give them a deadline to respond with a payment commitment
and make clear that failure to respond will result in further action being taken against the
business. If they persist that the debt is disputed, you must immediately collect the undisputed
Special Circumstances for Personal Guarantors – While the personal guarantor does not
enjoy protection under the FDCPA, there is some indication that the courts apply FDCPA rights to
third parties, such as a neighbor or spouse that is not a party to the debt. While you are not
required to keep any information confidential, you must only contact the PG at home during legal
SECTION 7 - Collection Law – FAIR CREDIT REPORTING ACT (FCRA)
It is the policy of the RMS Financial Services Unit that we DO NOT report any of the debts we
collect to any of the credit bureaus. Credit reports and scores are based entirely on how a person
pays their bills and manages their credit. Often consumer debtors will inquire about the effect of
the debt on their credit. Here are some responses to typical questions regarding consumer credit
Will you update my credit once I have paid this?
RMS does not report to any of the credit reporting agencies, so we will not update your credit.
However, pursuant to the Fair Credit Reporting Act, better known as the FCRA, your creditor
must update your credit to reflect the correct status of this account, which in this case would be
“Settled” or “Paid.” We will notify your creditor of your payment, and if they have reported this
debt, then they are legally obligated to update your credit.
If I pay this, will the creditor remove this from my credit report? (Sometimes called “Pay
A “trade line” cannot be deleted. However, once the account is paid or settled, the reported
status of the account must be updated pursuant to the FCRA. Keep in mind that the credit report
is a history of your credit and transactions. Thus, the trade line must remain on your credit report.
The best that can happen at this point is that you change the current status by paying or settling
the account. Remember that other than a bankruptcy, charge-off and judgment are the two worst
statuses you can have. However, you can take action now to remedy this situation and your
Can I get a letter from you/the creditor guaranteeing that my credit report will be updated?
All of our payoff and settlement letters advise you that upon completion of the payment
agreement, your credit will be updated to reflect a Paid or Settled status. Once we agree to the
terms, I can send you a letter outlining the agreement. However, your best protection is
guaranteed by federal law via the FCRA.
How will my credit be affected by a settlement?
Your creditor will report the account as “Settled.” Currently your credit reflects the account being
a charge-off, essentially that you defaulted on a legal and binding agreement and refused to
resolve it amicably with the creditor. And, the only thing that is worse than a charge off is a
judgment or bankruptcy. A settlement on the other hand reflects that you worked with the creditor
to come to mutually agreeable terms and followed-through with the payments as agreed! It also
reflects that nothing else is owed to the creditor, which is a huge improvement over a charge off.
The bottom line is that we do not report to the credit bureaus directly. We simply represent
creditors and report back to them on what occurred. We report payments to the creditor, and the
creditor reports to the credit bureaus.
NEVER TELL A DEBTOR THAT THEIR CREDIT WILL BE IMPROVED!!! You can tell a debtor
that their credit will be amended or updated, but you cannot tell them their credit or credit score
will be improved. You can also tell them that potential future creditors will prefer to see that the
account is resolved and nothing further is owed. The credit scoring models used by the credit
reporting agencies are complex and proprietary. We cannot know how paying the debt will affect
a person’s credit score, so it would be misleading to tell them that paying or settling the debt will
improve their credit. It is possible that paying the debt will have no impact or a negative impact
on their score depending on numerous other factors used to calculate the score.
SECTION 8 - Collection Law – BANKRUPTCY
Bankruptcy is the state of being financially insolvent or unable to meet debts or discharge
liabilities. Bankruptcy law applies to consumers and businesses. If you learn of an applicable
bankruptcy you are not to contact the debtor any further. All contact must be restricted to the
bankruptcy attorney. In order to handle a bankruptcy you will need to have a basic understanding
of the types of bankruptcies and how they work.
There are 4 types of Bankruptcy.
Chapter 7 - This is a voluntary or involuntary court proceeding to liquidate consumer or business
assets. The proceeds of the liquidation are used to pay as much of the outstanding debt as
possible. Secured creditors are paid first, then if anything remains, the unsecured creditors are
paid. Businesses are dissolved in a Chapter 7 bankruptcy and no longer operate. This is the
most common type of consumer bankruptcy.
Chapter 11 - This is a voluntary court proceeding that gives businesses an opportunity to reorganize their business to recover their ability to pay their debts over time, usually up to five
years. The business does not close down, but is protected from collection proceedings prior to
the bankruptcy filing date. Those debts are then re-structured and the business pays them back.
Usually the business is required to remain current on post bankruptcy debts. This is the most
common type of commercial bankruptcy. Think airlines!!!
Chapter 13 - This is a voluntary court proceeding that gives individuals an opportunity to reorganize their debt. Assets are not necessarily liquidated, but the debtor makes a settlement with
creditors that includes a payment plan lasting up to five years. Ch. 13 bankruptcy does not
require that all creditors be included.
Chapter 12 - Very Rare. This is for people in the farming industry. Assets are protected while a
trustee determines the ability to recover financially.
A bankruptcy can be either Discharged or Dismissed.
A “Discharged” bankruptcy is one that is resolved in the debtor’s favor. The court has granted
the debtor’s petition and dealt with the creditors accordingly. Bankruptcy protection survives for
the debts included.
A “Dismissed” bankruptcy is one that has been rejected by the court. Creditors are permitted to
pursue these debtors directly. Bankruptcy protection does not survive Dismissal. A bankruptcy
may be dismissed if a debtor has sufficient assets that the court finds the debtor does not need
bankruptcy protection. Another reason a bankruptcy may be dismissed is that the debtor did not
comply with directives of the court, missed deadlines, or did not submit appropriate
SECTION 8 - Collection Law – BANKRUPTCY (continued)
If a debtor has filed bankruptcy the courts impose an “Automatic Stay” against collection activity
and all legal actions. During that time all creditors must cease contact with the debtor and deal
with their bankruptcy attorney. If a debtor has filed bankruptcy, ask the debtor or the debtor’s
attorney to provide the following information:
Was this debt included?
What was the court’s ruling (discharged or dismissed)?
The creditor will need this information should they choose to participate in the bankruptcy
proceedings. Depending on the debtor responses, you may or may not need to cease all
communication with them.
Immediately cease communication if:
The type of bankruptcy filed is appropriate to the debt (consumer or commercial)
The debtor has retained an attorney, and the attorney confirms the bankruptcy is
The debt in question is included in the bankruptcy.
The debtor filed a Ch 7 bankruptcy and there were no assets
The debtor may not be entitled to protection from the bankruptcy court if:
A debtor business claims that a debt is covered under a personal bankruptcy. For
example, Mr. Smith owns a printing business in a partnership with Mr. Jones. Mr.
Smith is filing a Ch. 13 bankruptcy due to $50K in unsecured credit card debt. Mr.
Smith is not entitled to include the debt to the business’s paper supplier in his personal
A consumer may not be covered if their business is filing bankruptcy. For example,
if a consumer owes for a personal cell phone bill, it cannot be included in a
business bankruptcy unless it was used for the business.
A debtor does not enjoy bankruptcy protection for any debt they failed to include in
the bankruptcy. For example, if a debtor files Chapter 13 bankruptcy to
restructure their credit card debt, they can still be contacted by creditors and
collectors on behalf of their utility bills.
A debtor does not enjoy bankruptcy protection for any debt incurred after the
bankruptcy has been discharged. If a debtor claims bankruptcy protection for a
debt from January of this year, but the bankruptcy was discharged 2 years ago,
this debt could not possibly be covered.
A debtor owes Child Support, Gov’t backed student loans, tax liens, other excluded
PERSONAL GUARANTEE – If a debtor claims bankruptcy for a credit card debt, both entities
must be bankrupt to discontinue collections. If the person filed bankruptcy and the business is
still active, the business is responsible. If the business filed bankruptcy, the PG is still
responsible. The only exception is under certain circumstances where the PG is the owner and
the business was a sole proprietorship, or the PG was self-employed, which means the person
and the business are one.
Note: While a debtor may not be protected from collection efforts in these circumstances, they are
protected for the duration of the bankruptcy from LEGAL proceedings.
In the following scenarios, apply what you have learned and explain how you would respond so
that you are in compliance with the letter and spirit of the law, but are also providing the best
collection service for our clients.
1. You have dialed a phone number that was provided by our client as the contact
number for a consumer debtor named John Smith. When you call, the voice mail
identifies the Smith residence, but does not specifically say “You have reached
John Smith.” Is it okay to leave a message at this number? Why or why not?
2. You have dialed a phone number that was provided by our client for Jane Doe,
but instead reach the rental office of an apartment complex. The receptionist
confirms that Jane Doe is a resident and asks if she can forward a message to
her on your behalf. Should you leave a message with this person?
3. The contact number provided to you reaches the debtor’s employer. The
employer demands to know why you are calling. What should you tell them?
4. You have called a debtor and begun a talk off with John Q. Debtor. After you
have delivered the talk off and the MM, the man advises you that he is Mr.
Debtor Sr. and it is Mr. Debtor Jr. that has a debt with our client. Have you
violated the FDCPA?
5. You have made contact with a consumer debtor. You have given the talk-off.
When you ask the debtor their intentions, they say something rude and hang up
on you. Would it be a violation of the FDCPA to call them back right away?
6. You call a phone number provided for a debtor named Bill Nopay. When you call
a man answers and refuses to identify if he is or is not the debtor. How can you
handle this situation so that you are in compliance with the FDCPA, without
letting our client down?
7. You call Bill Nopay again a few days later (Bill lives in Massachusetts, by the
way). This time, his wife answers the phone and confirms he lives there but will
not give him the phone unless you tell her why you are calling. What should you
8. You call ABC Speedy Delivery Service, Inc. regarding an unpaid debt. You
speak to the location manager who very rudely advises you that he is invoking
his right to cease and desist, demands your name and physical location, and
threatens to file a complaint with state attorney general of your state and his, the
Better Business Bureau, the Federal Trade Commission (FTC), and your direct
supervisor if you continue to harass him and his staff. How should you respond?
9. You have had a good call with a debtor. You gave the talk-off and the minimiranda. You offered a settlement and the debtor accepted. You are just about
to finalize the deal, when the debtor asks you for written confirmation from our
client that the debt will be removed from their credit entirely once they pay. How
should you respond?
10. You have contacted a debtor and the debtor directs you to their bankruptcy
attorney. When you contact the attorney, he states that the debtor filed a
Chapter 13 bankruptcy and the case was discharged, but the debt you are calling
about was not included. What should you do next?
11. You have contacted a business debtor regarding a debt for a credit card, the last
payment having been made in November of 2004. When you contact the
company, you are told that all bills related to your client were covered under their
bankruptcy. When you receive the bankruptcy notification they fax, it shows that
the bankruptcy was discharged in May 2001. What should you do next?
12. You have contacted a consumer debtor who refers you to his bankruptcy
attorney. The bankruptcy attorney advises you that the debtor’s business is filing
bankruptcy. What additional information do you need from the attorney and what
are the possible next actions based on what the attorney says?
13. You contact a consumer debtor, give the talk-off & MM and the debtor
immediately asks you for copies of his contract, copies of invoices, and a copy of
the contract between RMS and our client. How should you respond to this
14. A debtor in the state of Massachusetts has agreed to a settlement but can’t make
the first payment for at least 30 days. What should you do?
15. You call a consumer debtor who said he is not paying because he is planning to
file a Chapter 7 bankruptcy on his over $100,000 in debt. He has not retained an
attorney yet. We represent JP Morgan Chase and in reviewing his credit report,
you see that his debts are as follows:
a. $10,000 to JP Morgan Chase for a Charged off credit card
$150 to Hollywood Video for an unreturned videos/DVD’s.
$750 to local hospital for medical bills
d. $84,000 to Sallie Mae (4 loans for $21,000 each) all charged off
e. $10,000 to Lehigh County for unpaid property taxes (Tax Lien)
How do you proceed with the conversation?
16. A debtor tells you she is represented by an attorney, gives you the phone
number and address for the attorney and hangs-up. You contact the attorney
who advises you that he represents the debtor for a Workman’s Compensation
case and knows nothing about this debt. How do you proceed?
17. A debtor tells you she is represented by an attorney, gives you the phone
number and address for the attorney and advises you that her attorney is very
busy and slow to return calls. That was a month ago. You have been calling the
attorney twice a week for the past four weeks with no response back. What do
18. You call a debtor at 7:00pm at home. The debtor is not in but the wife tells you
that the best time to reach him is at his work number at 5:00am PT. She
explains that his work number is a cell phone and he is a contractor. From
5:00am to 6:00am he is loading his truck and preparing for the day’s jobs. The
debtor is a consumer and you are calling regarding a consumer debt. How do
you handle this?
19. You call a debtor named Jim Smith in Massachusetts. Someone sounding like a
man named “Mark” answers and says that he is Jim’s spouse. Realizing that you
are uncomfortable with his explanation, Mark goes on to say that this happens all
the time, that Massachusetts is the only state that allows same sex marriages,
and that you are permitted to speak with him as the spouse. What do you do?
The Art of Collecting
Section 1: Message and Talk-Off Scripts
The scripts on the following pages have been developed by management and refined through
experience. Each script is designed for maximum results based on the intended audience, and to
be compliant with any laws governing collections.
As a collector in the Financial Services unit, you will be expected to do the following:
Memorize each script
Demonstrate understanding of each script
Recite each script so that it doesn’t sound rehearsed or rote
Analyze situations to determine which script is appropriate
Make use of the scripts in different situations
Evaluate your delivery and tailor it to each debtor
The message scripts are written to elicit a call back. The best way to make sure a debtor
DOESN”T call you back is to leave a bad message. For this reason, it is important to speak
slowly and clearly.
You cannot be assured of the quality of the recording on the other end. Assume the quality is
poor, and leave a message that can be understood regardless of the quality of the recording
device. The person retrieving the message will need to write down the information you are
leaving. Especially when saying the phone number and claim number, slow down. A good test is
to write the numbers as you say them a few times. This will help you learn the pace at which you
need to say them.
The Talk-Off script is the most important script. It accomplishes a few different things:
It identifies you and RMS as required by the FDCPA (for consumer debts).
It identifies the creditor, the amount due, and the status of the debt.
It sets the tone for the call and, if delivered well, establishes you as the authority figure.
It gives the debtor the opportunity to state their situation opening the dialog for you to
work with the debtor to bring the account to resolution.
There are different scripts for consumers and for businesses. Remember, the FDCPA defines a
consumer as “any natural person obligated or allegedly obligated to pay a debt” and a debt as
“any obligation or alleged obligation of a consumer to pay money arising out of a transaction in
which the money, [etc.] which are the subject of the transaction are primarily for personal, family
or household purposes.” This is the standard you will apply when deciding whether to leave a
consumer message or a commercial message, or to use the consumer or commercial talk-off.
Your initial contact must include the following:
• Your name and the name of the company you work for
• The name of the creditor on whose behalf you are collecting
• The amount of the debt
• Request for payment in full (PIF)
Let’s review the scripts:
Message Scripts - Consumer
This message is for (DEBTOR FULL NAME). If you are not (DEBTOR FULL NAME)
then please hang up or disconnect this call now. If you are (DEBTOR FULL NAME), then please
continue to listen to this message.
By continuing to listen to this message, you acknowledge that you are ((DEBTOR FULL
NAME). (DB FIRST name ONLY), you should not listen to this message in the presence of other
people so they can hear it as it contains personal and private information. There will now be a
three (3) second pause in this message to allow you to listen to this message in private….
This is (COLLECTOR NAME) from RMS. This communication is from a debt collector.
This is an attempt to collect a debt and any information obtained will be used for that purpose.
Please contact me at 1-866-604-4414 to discuss this important, but personal business matter.
Remember the MINI-MIRANDA
Hello, my name is your name . I'm calling from RMS regarding a claim that's been
forwarded to my office against you…(PAUSE), on behalf of a client I'm representing. It’s
regarding the MasterCard/Visa you had with Original Creditor Name .
Before I go any further, FEDERAL LAW REQUIRES ME TO ADVISE YOU THAT THIS
IS AN ATTEMPT TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE
USED FOR THAT PURPOSE, and THIS CALL MAY BE MONITORED AND RECORDED FOR
QUALITY & COMPLIANCE PURPOSES.
Do you know what your balance is right now?
Were you aware that it had come this far?
WAIT FOR DEBTOR TO RESPOND
At this point, your balance is $_______, and my client is asking me to contact you to
determine how you plan to pay for this in full, pursuant to the cardholder agreement you signed.
Rather than making a rash decision, I wanted to contact you first to find out what your intentions
are. Can you tell me what happened here?
Note: The FDCPA requires you to state the mini-miranda on the first contact, and to identify
yourself as a debt collector on each subsequent contact. Even if someone else has already
spoken to a debtor, you should give the mini-miranda if it is your first contact.
Scripting - Commercial
MESSAGE on voicemail
This message is for ____________. This is __________, and I’m calling from Receivable
Management Services. We are a D&B strategic partner & you’d probably know us by our
former name, D&B Receivable Management Services. Please contact me immediately at 1866-604-4414, again that’s 1-866-604-4414. When you call, please reference your file #
_____________. Today is ____________, please contact me immediately.
MESSAGE on voicemail - DEADLINE
This message is for (NAME OF COMPANY OWNER OR LEGAL COUNSEL). This is
___________, and I’m calling from Receivable Management Services. As you are now aware by
our numerous letters and phone calls, a complaint has been forwarded to us against you by our
client (CLIENT NAME). Be advised, if I do not hear from you by 5pm EST on (date in 2 business
days), I will be forced to advise my client that an amicable resolution is not possible, and
recommend that further collection activity take place against you. To avoid further negative
action, please contact me at 1-866-604-4414, again that’s 1-866-604-4414. When you call,
please reference your file # ______________.
TALK-OFF “Live” Business or Responsible Party
I’m calling from Receivable Management Services, formerly known as D&B Receivable
Management Services, and I’m contacting you regarding a claim that’s been forwarded to my
office by our client, _____________ in reference to the Business Card account. Be advised
that under certain circumstances, Receivable Management Services may report
information to D&B for inclusion in the Business Information Report, which, most people
refer to as their company’s Credit Report. I wanted to contact you first in an effort to resolve
this account amicably…
Were you aware that this account had been forwarded to us?
Did you get the mail we sent to ___________ address?
At this point, the account balance is __________ and my client is asking me to contact you to
determine how you plan to pay for this in full, pursuant to the cardholder agreement you signed.
Or, whether I should recommend proceeding against you with further collection activity. Rather
than making a rash decision, I wanted to contact you first to find out what your intentions were.
Can you tell me what happened here?
Section 3: Setting yourself up for a good outcome
The object of every collection call is to get payment in full. Sometimes this isn’t possible, but you
need to start assuming you will achieve that goal. You will need to evaluate in the moment what
is possible and strive for the best possible outcome. The possible outcomes in order of most
Payment in Full (PIF)
Settlement in Full (SIF)
Payment Plan for Balance in Full (PPA-Payment Plan Arrangement)
Payment Plan for Settlement in Full
***All of these are dependant on each client’s requirements. Some clients may
not authorize SIF or PPA.
There are certain things that you can do to set yourself up to succeed in this:
Establish yourself as the authority figure in the relationship. Let the debtor know you are
calling to hold them accountable for a legal obligation they entered into. If you deliver the
talk-off correctly, you will set that tone.
Educate the debtor. This includes:
Making the debtor understand the difference between our collection agency and
Acting as a financial advisor to identify untapped monetary resources the debtor
may have that can be used to pay the debt.
Making the debtor understand the seriousness of the legal obligation they
Advising the debtor of the consequences of non-compliance.
Set realistic goals and deadlines
Set the expectation that they will call you back and not the other way around
Create a sense of urgency in every contact
Only make commitments to them that you can keep
Section 4: Consumer Collections Overview
The FDCPA governs all consumer collections. In order to be successful you must observe the
FDCPA, but the FDCPA serves to tell you how to be compliant with the law and what you cannot
do when attempting to collect a debt from a consumer.
Here’s what you must do:
There are two types of debtors. There are debtors that have not paid because they think they
can’t, and there are debtors that have not paid because they think they can get away with it.
The most common reason that consumers do not pay a debt is due to some change in their
circumstances. Perhaps they became ill, went through a divorce, or lost their job. No matter how
compelling of a reason that you are given, it does not change the contractual obligation that the
person entered with our client.
Most people want to pay their debts and maintain good credit. The consumers with whom you
will work have not been able to solve their financial problems on their own. For some, this may
be their first experience dealing with a collector at a collection agency. For others, they may be
receiving numerous calls from other creditors or collection agencies and you may be in
competition with them to get paid.
The smaller group of consumers consists of those that do not pay their debts because they think
they can get away with it. Be very careful with these debtors. You need to convince these
debtors of their legal obligation to pay their debt. These debtors often have a detailed knowledge
of the FDCPA. Do not allow yourself to be baited into a violation.
On the following pages we will review some of the common consumer objections to paying a debt
and the rebuttals that you can use to overcome them. We’ll also review sources of funds that you
can explore to locate funds for the debtor to pay the debt.
Section 4: Consumer Objections and Rebuttals
The last line of each of the Talk-Off Scripts is “Can you tell me what happened here?” Every
debtor has a story that they think is unique and should mitigate their obligation to pay. The
bottom line is that a contract is a contract. The debtor that you are contacting signed a contract
that stated that they would pay. There is no exception for a rainy day, or even a catastrophe.
The following are some common objections debtors will give you as to why they cannot or will not
take steps to meet the legal obligation they entered into:
Don't k now
w hy I ow e it .
You entered into a legal and binding con t ract which stated that if at any time
you defaulted, you would be responsible for paying the balance I N FULL, UPON
DEMAND. You defaulted. And, you never paid it back pursuant to the
agreement you entered into freely. At this point we need to determine your
willingness to repay this or subject yourself to “Further Collection Activity.”
I’m sorry to hear that. I hope (whatever the problem is) is better now. The fact
remains that you signed a legal and binding contract that if you defaulted, you
would be responsible for paying the balance I N FULL, UPON DEMAND. At this
point, we must determine your willingness to repay this or subject yourself to
“Further Collection Activity.”
That's a voluntary payment program and you could default again at any time. You
will need to borrow from someone, and make payments back to them
1. You signed a legal and binding w r i t t en cont r act stating that you would
make the payments voluntarily, and you didn't. My client certainly can't
accept your commitment to make payments, verbally over the phone, which
holds even less weight than the original signed contract.
2. If you had really wanted to make payments, you would have contacted my
client months ago to offer payments.
1. What's going to happen between now and then that will enable you to get the
2. What avenues do you plan to investigate to get the funds?
3. Everyone in the world is a phone call away. It shouldn’t take more than a day
or so to make a phone call.
The divorce decree DOES NOT PREEMPT THE ORI GI NAL CONTRACT you
entered into. Your attorney should have explained that to you. While your spouse
may be responsible to you for this pursuant to the divorce decree, you are still
responsible to the creditor under the original agreement. You can go after your
spouse later using the divorce decree, but the Settlement will not be available
then. ( DO NOT refer the DB to talk to their divorce attorney unless absolutely
necessary. This is a common DB stall tactic. I f they insist, get the attorney on a
conference call to expedite the process. The attorney will likely not want you on
the phone with their client but at least you know they have made contact with the
1. Apologize for their loss & advise them that you would like to ensure that they
receive no more calls. To do so, you will need to obtain a copy of the death
certificate. Ask for it directly unless the client directs otherwise. Give plenty
of time and be very empathetic. NO FOLLOW- UP, we can check Social
Security Records online.
2. Ask for a copy of the Af f idavit of Fraud. Explain that if they had handled
the loss appropriately, they should have only been responsible for a limited
amount of liability.
Som et hing
m ak e
Paym en t s
t im e t o call
Decr eepushing on
Debt or is
Claim s f raud:
( lost t he
Section 5: Educating consumer debtors on sources of funds
As a collector, quite often your job is to educate a debtor on how they can pay a debt.
Sometimes the debtor cannot imagine a way out of the problem they are in. Often they may be
embarrassed about the financial situation they’ve gotten themselves into. Educating a debtor
consists of two things. Identifying a source of funds they can tap into to pay their debt, and
making the prospect of doing that seem possible.
The following are some sources of funds that consumer debtors can use to pay a debt:
Fr iends & Family
( most common)
WHAT YOU NEED TO KNOW TO MAKE IT WORK
Have you borrowed from them before? For this much? And paid
them back on time? So it looks good that they will be able to help
you out then.
Pay check ( of t en
This is weak because the debtor will say his pay was short, took
of f er ed by debt or , out too many taxes, pay was delayed, had to use to pay for car,
but w eak)
If debtor has been at the POE for many years and the company is
small or medium sized, this is an option. Very small companies
may not have cash flow and large companies are too rigid.
A great source if the plan allows it, but can take 4-8 weeks to
complete the paperwork & receive a check. Have the DB borrow
from someone and pay him/her back when they get the 401k
401K/ Ret ir ement money. If this is the only option, confirm with the Plan
A great option, but debtor needs enough equity to pay off all
debts & 1st mort. Usually not even considered if mortgage is less
Ref inancing Home than 5 years old. See the next page for more info.
This is another great option, but the debtor's credit must be
somewhat decent or the DB will need a cosigner, or better yet,
someone to get the loan for him. Banks are most strict. Credit
Unions are usually smaller and more "homey". They will take
more into account, but take longer for answers (loan approval
committee). Least strict are finance companies. Can be found in
Per sonal Loans
the yellow pages under "Finance" or "Loans."
Almost everyone has them, but they are often overlooked for their
Lif e I nsur ance
cash value. If DB has Permanent Life insurance Whole Life,
Universal Life, Variable Universal Life.
St ocks, Bonds,
Less likely, if they had these sources, they would have been
liquidated by now. But, it's worth asking.
Adv ance f r om
**IMPORTANT Loan must close at least seven calendar days prior to EOM.**
o Do you own your home? For how long?
o Is the mortgage in more than one name?
o Single family, Multi-family home, Mobile home? Trailer?
o Second mortgage, home equity?
o Liens, encumbrances, clear title?
o Try to steer to company we know does B & C credit loans
o If already in process, get name & number of loan officer and company and
permission to discuss with loan officer & find out where they are in the
o TIMELINE: Often done over the phone in 15 minutes
o Loan officer will order appraisal.
o TIMELINE: Usually a couple days, can take up to a week
o Loan officer will order the title search.
o TIMELINE: Usually only two days
o After all preliminary work above is done, the loan will go to underwriting. This is
where the loan gets through “Final Approval”
o TIMELINE: Usually 1-2 days
o After underwriting is complete, the loan officer will contact the debtor to
coordinate a convenient time to close the loan. The debtor almost always must
go to sign in person.
o TIMELINE: There is no definite time frame for this. It’s all up to the debtor.
o Federal Law requires a three day rescission period
o Some companies (Ameriquest) require a seven-day rescission period.
o TIMELINE: 3 days minimum, but could be up to seven days
o The day after the loan comes out of rescission, it “funds.” Funding is when the
lending institution actually bank wires the money to the branch to cut the check to
o Funds can be sent directly from the loan company to us on this day, or a check
may be cut to the debtor. We always prefer the loan company to send us the
funds directly. If funds are given to the debtor, we have to trust the debtor to
send them to us.
o TIMELINE: This takes only one day
On the next page you will see a flow chart of how a normal re-finance works.
Section 6: Commercial Collections Overview
Many aspects of collecting from businesses are the same as collecting from consumers. If you
are collecting on a business account with a personal guarantor, you will be collecting from the
person and the business.
You may encounter different types of obstacles to achieving your objective, and the solutions to
those obstacles may be different from strictly consumer accounts. What those obstacles are and
your responses will relate to the debtor business. Where with consumer debtors there are
debtors that “can’t” pay and debtors that “won’t” pay, with commercial debtors, you could simply
need to figure out how their internal process broke down that prevented the debt from being paid.
Here are some of the major differences between consumer collections and commercial
It’s personal. You are dealing in terms of a person’s
It’s not personal. The funds come from the
business and likely do not directly impact
the person handling the issue.
Intent vs. Ability are the major factors
Intent & Ability can be factors, but their
business practices may also be a factor
One on one contact – the consumer.
Possible multiple contacts and escalation
Governed by FDCPA (Fair Debt Collection Practices
Not governed by FDCPA. Businesses are
When collecting from businesses, it is important to remember that the FDCPA does not apply as
we learned in Unit 1.
How does this affect what you do? You can speak to anyone at the business in detail about the
debt. There are no restrictions on contact. There is no possibility of “overshadowing” the initial
30 day period, so your first call, on the first day can be a demand.
If the debt is a business debt, the Personal Guarantor is not afforded protection under the FDCPA
because the debt you will be collecting is not for personal, family, or household purposes.
Breaking through to the right person
Before you can successfully deliver a talk off, you must first reach the person at the business that
will be able to resolve the debt. If you are lucky, the file will have the direct phone number for the
owner or president of the company, but usually, this isn’t the case. More often, you will encounter
an auto-attendant phone system or a receptionist.
Auto-attendant systems: The sophistication of the system will be dependant largely on the size of
the company. Your objective is to get through to the right person, but if you can’t determine it
from the phone system, any person will do. Always try to hit “0” to reach an operator (you may
need to do this 3 times). If this isn’t an option, use whatever options are available to get any live
person on the line. If your only option is to dial an extension or spell a last name, choose the
latter option and attempt common names like “Smith” or “Jones” until you reach someone.
Receptionists: Receptionists can be a valuable source of information. Probe the receptionist for
details about the business. Get him or her to provide you with the name, title, and direct dial
number for the person you will be speaking with, and confirm if that person is available. If the
receptionist is unhelpful, call back and ask for the Accounts Payable Department. This is a last
resort, because A/P did not get the debt paid up to now, but they may be more cooperative.
Section 7: Laying the groundwork
Each business is unique. In order to be successful you need to ask questions to learn about the
debtor business’s individual sitiation.
Here are some things you will want to ask about during your calls that will help you to handle
What is the legal set-up of the business?
Sole-proprietorship – Usually these are family type businesses, or the debtor may
consider themselves to be “self-employed.” When you are collecting from a business like
this, it is expected that you will review both the consumer and the commercial sources of
funds. You can assume you are probably dealing with a sole proprietorship if the
business line rings to a home or if you are referred to speak to a family member.
Partnership – Each partnership is unique. You should work both the consumer and
commercial sources of funds with any available partners.
Corporation, LLC. – Only the commercial sources of funds will apply. The owners, board
members or executives of a corporation or limited liability corporation are personally
insulated from any debts incurred by the business. You can assume that you are dealing
with a corporation if you are directed to a department, or if there is an executive group.
What does the business do?
If this isn’t apparent, ask. This will help you to determine what sources of funds will be applicable
and to assess the prospects for payment. For example, seasonal businesses will go through
peaks and valleys but may have large receivables. Retail businesses may not have large
receivables but may have a more steady income over all.
What are their payment processes?
Do they have an A/P or bookkeeper that just needs a bill?
Do they have a series of approvals that are required?
When do they cut checks?
You can ask anything about a business as long as it is professional.