MMPS QUOTE OF THE DAY

“Creditors have better memories than debtors.” — Benjamin Franklin, Poor Richard’s Almanac (1758)

COMMERCIAL COLLECTIONS VS. CONSUMER COLLECTIONS

Before engaging a collections law firm to pursue an outstanding debt, any creditor must understand who owes the debt and who should be pursued to recover the obligation. In a nutshell: Does a consumer or business entity owe the money?

If you or your lawyer do not understand the differences on how to pursue the collection of a debt against a consumer versus a business, the likelihood of your lawyer’s ability to recover the debt will be greatly diminished.

The following explanation will assist on how a creditor should evaluate whether a claim is a consumer or a commercial collections matter.


Do I have a consumer debt collection matter?

The Fair Debt Collection Practices Act (FDCPA) outlines the guidelines for consumer debt collection. As defined in the FDCPA, a “consumer” is “any natural person obligated to pay any debt” incurred for personal or household expenses.

The purpose and importance of an experienced consumer collections law firm is the knowledge that their representation provides. In the ever-changing environment of consumer collections law, having a law firm familiar with both the intricacies of the FDCPA and other State and Federal laws and regulations is invaluable. If your lawyers do not specialize in consumer collections law, they will likely find themselves in the crosshairs of either counterclaim litigation or potentially subject to regulatory restrictions and/or financial penalties brought by the Consumer Financial Protection Bureau.

Do I have a commercial debt collection matter?

When one business owes another business money for goods provided or professional services rendered, but not paid in a timely fashion, this may result in a commercial collections claim. Since the FDCPA does not apply to these types of matters, having a commercial collections attorney with a distinct and specialized skill set in all aspects of business law will be essential to the successful negotiation and recovery of your claim.

Does the distinction between consumer and commercial debt dictate the ease of collection?

No, the details of the debt collection matter will dictate the ease of collection. The awareness of how to follow the relevant strict laws and regulations will greatly assist a collections attorney in the recovery of a consumer debt. Although this does not guarantee a payment in full, it will ensure that the process was done according to regulatory and ethical guidelines. In addition to knowledge of advanced collections strategies, pursuing a commercial collections matter requires a strong understanding of the inner workings of a business and its operations. It is critical to know who the key decision makers are within the debtor corporation and be able to evaluate the purported financial distress of the company.

How to Decide to Use a Collections Law Firm after I understand my claim and my debtor?

Engaging a law firm that has the expertise with both types of debt collection processes will give you, the Client, the greatest results. The Collections Group at MMPS has more than a decade of experience recovering consumer and commercial debt. They understand the importance of monitoring changes in the collections industry and adapting to the new rules and regulations. For more information please email the Collections Group at clientservices@mmps.com