As a small business owner, receiving full, timely payments is crucial to your operation’s success. You may have to pursue nonpaying clients but might worry about how to do so in a firm and effective manner. Knowing your rights as a creditor can help you strike such a balance and avoid questionable collection practices.
Understanding collection laws
To collect a debt, you must follow the rules outlined by the Fair Debt Collection Practices Act (FDCPA). This law requires creditors to avoid threatening, harmful behaviors when pressing for payment. Potential violations include:
- Harassing or abusing the debtor
- Threatening to seize the debtor’s property
- Lying about their identity to collect the debt
- Alleging the debtor’s actions constitute a crime
- Calling a client in arrears multiple times per day
- Contacting debtors at work or at unusual hours
Despite these restrictions, there are ways to collect debt from clients without burdening them. So long as you contact the debtor between the hours of 8 a.m. and 9 p.m., you can call them to remind them to pay their debt. You can also contact the debtor by mail or fax. And you can contact the debtor’s family and friends in attempts to track them down.
If the debtor remains in arrears despite numerous notices, you can file a lawsuit against them. This lawsuit will allow you to obtain a judgment, which enforces the collection of the debt. By Louisiana law, creditors only have three years to pursue a judgment on open accounts and 10 years to do so on contracts.
Exercising your rights
Debtors can impact the financial well-being of your small business. By following federal and Louisiana law, you can pursue their payments and keep your enterprise solvent. An attorney with debt collection experience can help you achieve what you’re owed.