Too Much Business & Personal Debt? – When Collection Agencies Call

Too Much Business & Personal Debt? – When Collection Agencies Call

By Gary Wartik

Vision Economics has been working with small businesses and their owners for many years in the effort to offer debt resolution options without using the court process.  As debt or accounts payable age on a company balance sheet or on one’s personal financial statement, and you are unable to pay what you or your business owe, your creditors will often file lawsuits in an effort to collect what they are owed.  More frequently, however, your creditors will first turn the account(s) over to a collection agency or collection law firm that gets paid a percentage of what they collect.  If  the agency does not collect from you, they in turn earn no fee for their efforts.  This often leads to the collection efforts being more aggressive than they should be.

As a result of often threatening approaches to collections in the past, Congress and the California Legislature in the last decade adopted legislation to better control how collectors act, and when they may contact you.  The changes mainly effected personal debt collection rather than collection efforts aimed at business obligations.  If you are an individual with personal debt, such as on credit and charge accounts, medical expenses and car loans, the law restricts when collection agencies may call you. Collectors must identify themselves with the name of their agency, indicate that they are calling to obtain collection and must provide their contact information if requested.  Collectors may not legally contact you before 8:00 AM or after 9:00 PM without your permission.  Generally, collectors may not contact you or anyone else at your business or at your work regarding what you owe, whether you are the business owner or an employee.  Collectors are also prohibited from threatening, misleading, harassing efforts or lying in the effort to collect from you.

In the event that you are unable to pay what you or your business owes its creditors, there are various options.  On the legal side, bankruptcy relief may be available for those who qualify by meeting what is known as the Means Test.  Assistance is also available through Vision Economics from the standpoint of working directly with creditors to reach some resolution of the debt, usually involving a settlement for appreciably less than is owned, based upon what you or your business, as the debtor, is able to pay.

If you or your business has debt issues, we have a list of excellent bankruptcy attorneys to represent you if, in our estimation, bankruptcy protection is warranted.  Vision Economics is also able to evaluate a given situation and deal with most debt issues.  Often the out of court arrangement is faster, cheaper and quieter than the legal process.  We will be able to advise you as to the best course to take based upon the facts presented, and if protection under the US Bankruptcy Code is the best approach, we can offer that direction.  The fact that much of our referrals on insolvency matters comes from attorneys reflects the recognition within the legal community that not everyone with debt issues either qualifies or otherwise belongs in a formal bankruptcy proceeding.

For further information, please give us a call at Vision Economics, 805-987-7322.

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