${site.data.firmName}${SEMFirmNameAlt}
Since 1989
Free Consultation
770-901-2666

Debt collection begins before you even extend credit

It's probably safe to assume that you opened your Georgia business to make a profit. You provide goods, services or both for a fee, and you expect that your customers and clients will make the required payments. That seems simple enough, but at some point, you find yourself dealing with a customer who failed to pay, paid with a fraudulent credit card or bounced a check.

Legal mechanisms are in place to allow you to collect on such debts, but you need to set up your business -- and the way you extend credit to your customers -- long before a problem arises. Having the appropriate protections in place can make debt collection a smoother process, even if you end up in court.

Deciding how you get paid

The type and structure of your business may help you determine how you will go about collecting payment from your customers and clients. Will you accept credit cards, personal checks or make other arrangements? Each form of payment requires slightly different terms.

For instance, if you decide to accept personal checks, you may want to clearly inform your customers that you will charge a fee if the check is returned due to insufficient funds. If you decide to extend credit to customers directly through your company, establishing creditworthiness beforehand is essential in order to predict the odds that they will pay.

If you decide to provide credit

You may find that extending credit to your customers directly would work in your best interests. If so, you may want to gather certain information that could assist you both in determining whether to extend credit and to locate the individual should debt collection activities become necessary. This information includes the following:

  • Name, address and contact number
  • Social Security number
  • Date of birth
  • Bank information
  • Current income and employer
  • Co-signer information if needed

With this basic information, you will be able to make a determination regarding creditworthiness and potentially locate a particular customer who doesn't pay.

Information to customers regarding the credit you extend

Under the Credit Practices Rule and other federal regulations, you must provide the following information to anyone to whom you extend credit:

  • Minimum interest charge
  • Annual percentage rate
  • Penalty fees
  • Terms and conditions
  • How to avoid interest payment
  • Billing rights
  • Consumer rights information

If you require a co-signer for a particular customer, that person should receive a notice regarding the fact that he or she becomes responsible for the debt if the signer fails to pay and to carefully consider this decision prior to making it since that person will need to be able to pay the debt if necessary.

If you need to begin collection efforts

If a customer fails to pay the debt owed to you, you may begin collection efforts. However, those efforts must comply with the Fair Debt Collection Practices Act. Understanding what that means may require sitting down with an attorney who can explain your rights and responsibilities. Moreover, you may want to consider involving an attorney throughout the process in order to ensure that you comply with all state and federal laws and that you set up your system in a way that makes collecting any unpaid balances smoother and easier.

No Comments

Leave a comment
Comment Information
Contact Us

Contact Isenberg & Hewitt, PC We welcome your questions and look forward to helping you achieve your objectives.
Contact us today to discuss your legal concerns.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Isenberg & Hewitt, PC
6600 Peachtree Dunwoody Road, 600 Embassy Row, Suite 150
Atlanta, GA 30328

Phone: 770-901-2666
Phone: 770-901-2666
Fax: 770-828-0100
Map & Directions

>