An experienced legal professional knows that any misstep during debt collection can lead to serious legal repercussions. To collect debt for a client, New York attorneys must understand and implement ethical practices during debt collection. The Fair Debt Collection Practices Act will ensure you can collect client debt payments without violating the rights of the other party.
Ethical Considerations During Debt Collection
If you are hired to collect debts for a client or a business, developing a debt collection strategy is crucial. It ensures that the debt collection attorney follows the legal procedures during the debt collection process and that it is within the limitations of the Fair Debt Collections Act.
Following these steps can maintain your client’s business and ensure a persistent cash flow.
1. Validate the Debt
Before the actual debt collection begins, the most critical element of debt collection is to first validate the debt. You must confirm that the debtor owes your client the money; otherwise, it could have serious legal implications. Gather the necessary information and paperwork detailing the amount owed, due dates, and other pertinent details relating to the debt.
You must perform the debt validation within the initial days of contact with the client. Every experienced debt collection attorney must complete this before taking any other legal action.
2. Empathic Communication
A business or client hired you as a debt collection attorney to help them collect the debts owed by a creditor. However, it does not mean it gives you the right to be rude and disrespectful toward the other party.
The bedrock of a practical and ethical debt collection process lies in communication. Be clear and respectful. Use empathic language to be considerate enough to the other party involved.
In a survey, many debtors (82%) revealed that they were likely to pay if the debt collector or attorney was empathic and understanding in their language and tone of voice. As a debt collection attorney, explaining the situation and the potential consequences of non-payment is crucial. However, it is also essential to listen actively so that debtors can explain their situation and why they cannot pay the debt within the agreed time frame.
Do not use aggressive language or threaten the debtor. They could use it as grounds for harassment or would be more likely to refuse cooperation in the debt collection process.
3. Be Flexible and Considerate
The idea of hiring a New York debt collection attorney is to help debtors and your clients reach an agreement on debt collection. It is not to cause stress to or punish the other party.
An ethical debt collection approach involves understanding the debtor’s situation and expressing empathy. Is it due to their current financial capacity and limitations? Did they have a medical or other financial emergency? Attempting to understand their situation breeds empathy, enabling you to reach a flexible agreement on debt collection.
If the debtor cannot pay the full amount, arrange a more flexible payment term. You can even agree on a debt settlement if the client previously approved it. Showing compassion never hurts and will inspire the debtor to resolve their debt as soon as possible.
4. Detailed Record-Keeping
Another crucial component of an ethical debt collection process is keeping detailed documentation of every step. Beyond good communication, this element is crucial because it provides a paper trail for every action taken during the debt collection. It also increases efficiency and boosts overall case management.
This step prevents potential disputes in the future, especially if you agree to a flexible arrangement for debt collection. It also promotes accountability from the debtor’s end, ensuring they honor their part of the deal.
5. Writing a Demand Letter Ethically
A demand letter from an attorney is a standard tool individuals and businesses use to get debtors to pay the amount they owe. Legal professionals, such as debt collection attorneys in New York, know how to craft the right demand letter that uses empathic and non-threatening language. This formal notification to the debtor details the amount they owe, due dates, etc.
When writing the demand letter, use assertive words without threatening or violating the Fair Debt Collection law. The goal of writing the letter is to maintain transparency between both parties and to establish credibility as the lawyer vested with the legal power to perform debt collection. Lawyers should be familiar with the FDCPA and its application to each case. Therefore, many businesses hire a lawyer to collect debt as they have the legal knowledge of applicable regulations to avoid legal consequences.
Why Hire New York Attorneys for Debt Collection?
Ethical debt collection is an opportunity to collect the money owed by debtors and maintain a positive relationship between your client and their debtors. Applying the ethical debt collection practices outlined in this guide is crucial in recovering outstanding debts and avoiding hefty penalties resulting from violating the FDCPA.
Moreover, it is a golden opportunity to preserve the rights and dignity of debtors, especially if their inability to make timely payments is due to unexpected circumstances.
