The Stevens-Lloyd Group, Inc. Business Debt Collection Services
A business debt is a debt-based financial arrangement between a financial institution and business, typically used to cover crucial capital expenditures or fund major operational costs, that the company might be unable to afford under a different circumstance. It is a common occurrence for businesses in their initial days, as expensive upfront costs may prove to be a hurdle while accessing debt and equity markets for financing. Like consumer credit, smaller businesses have to rely on line of credit, term loans and unsecured loans for financing.
For enterprises struggling with arrears, business debt settlements are healthy alternatives to bankruptcy. We can assist you to negotiate with creditors and work out a favorable repayment plan.
How Commercial Debt Collection Agencies Work
Though commercial debt collection agencies are financial firms, at their core, they offer B2B debt collection services. When a business has defaulted on outstanding debt, the creditor will naturally work towards obtaining the due payment. If a business fails to clear off the debts within 90-120 days of the stipulated period, the creditor is left with 3 options- sue, assign, or sell off the debt to a commercial debt collection agency.
Here, “Assign” signifies entering into an agreement with a third party and transferring the right of debt collection to the latter. The third party will act on behalf of the creditor and may have the right to keep and collect payment on the debt, or just the responsibility of collection.
Commercial debt collection agencies are financial firms, with accounting practices like large consumer banks. They buy debts owed to creditors at a fraction of the actual amount owed, and then personally track down the business in question to recover such debt. They are notoriously aggressive, and are basically compelled to do so, as their income source depends on the debtor repaying the debt. The first steps of communication are attempted through e-mail or phone. However, if such repeated attempts bear no fruit, they may file a lawsuit.
The Standards of Commercial Debt Collection
The Fair Debt Collection Practices Act (FDCPA) governs the operations of collection agencies, protecting consumers with outstanding arrears from harassment. However, the FDCPA does not apply to commercial debt collectors, who are under the supervision of Commercial Collection Agency Association (CCAA). The firms must abide by some high standards of regulation, upheld by strong ethics to qualify and become a certified member of the CCAA.
The licensing requirements of the CCAA vary from state to state. First, the firm must submit an application, purchase a bond and subsequently pay a licensing fee. The licenses have to be renewed annually or once in two years, for example, Arizona has enacted licensing status. The government conducts periodical audits based on the statutes.
Reducing Your Commercial Debt
If the creditor decides to sell off the debt to a collection agency, they will be entitled to make only pennies out of their initial investment. So, often they are inclined to negotiate and settle for a reduced payment before transferring the debt to the collection pipeline. However, no creditor is legally obligated to negotiate a reduced payment.
The negotiations generally start when the debtor (or debtor’s attorney) makes an offer that reflects the amount he/she can realistically afford to pay. The creditors are more likely to settle for an offer close to the initial amount owed, as their primary motive is to minimize overall loss.
These negotiations can be tricky, so, it’s advisable to seek professional advice before entering into any such arbitrations.
The Stevens-Lloyd Group, Inc. is comprised of eager professionals who offer the best debt settlement services. Our debt collection attorneys have gained years of experience negotiating with creditors. We excel at what we do because we put added emphasis not only on our work but also on catering to our customers’ queries and doubts. For more assistance, reach out to us at 888-882-2282.