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How To Start A Debt Collecting Agency


When it comes to debt collecting, each US state has its own set of laws and requirements. This means that if you want to collect debts from across the whole country, the rules can differ so much between the states that it can get very costly and confusing. You cannot afford to neglect any of the laws in any state, but if this is something you are considering you may be wondering how to set up your own debt collection agency.

What Is a Debt Collection Agency?

Over the last few years of economically bad times, more people than ever have been unable to pay their liabilities as and when they fall due. A debt collection agency acts on behalf of the people that are owed money, and although for many people it conjures up bad vibes, for businesses they can be a lifeline, collecting the money that they need for their company to survive.

Get Experience and Learn the Rules.

If you are considering setting up your own debt collection agency, getting experience with an existing company will help you to learn the rules.  Ignorance of the regulations of the state you are working in is no defense if you violate any laws. It is up to you to learn the rules and regulations and then to stick to them rigidly.

Depending on where you are located, there are laws relating to what time of day you can call debtors, the steps you can take to collect different types of debts and in some states, they even specify what phrases you can use when you are speaking with the person you are collecting from. Good business practices are vital for you to build a trustworthy reputation, and complying with all the laws will help towards this.

Get Licensed.

You will need to be licensed according to the laws of your state when you start your debt collection agency. You can find out more about the licensing in your state at Cornerstone Support, which will also let you know if you need to pay a bond, and if you do, how much that is. You have to remember that your license is only for the state you applied in, and with the exception of a few exemptions, you will need to apply in other states if you want to operate elsewhere.

The Exemptions.

The exemptions do vary from state to state, so not all of the below will apply to every state, but the exemptions can include:

  • Commercial exemption is sometimes given to agencies that 100 percent collect business-to-business debts.
  • Some law firms and collection law firms are given exemptions from licensing requirements in some states.
  • Some states will wave their licensing requirements if the collection agency does not have a physical presence in the state, and is only collecting debts via communications such as phones or email.

Collecting debts is not the easiest of professions to choose, but it can be lucrative and fulfilling when it is done correctly.