How to Set up a Home Based Debt Collection Agency in Texas

Texas is no different from the rest of the country. There are many Texans who, for one reason or another, are falling behind on their financial obligations. Because of the increase in loan default and late payments, Texan businesses need the assistance of debt collection agencies to close out open unpaid accounts. When there is a need, a prudent businessperson does what she can to fill it. Here’s how to go about opening a home-based collection agency in Texas.

Difficulty: Moderate

Instructions

1. Take a self-assessment. Make sure you have what it takes to be a debt collector. Not everyone has the fortitude, investigative skills, organization and communication skills to start a home based debt collection agency. Before you start your learning process and purchase the home equipment to open your agency, make sure you have the stuff that debt collectors are made of.

2. Become familiar with Texas collection laws. Collection agencies in Texas must secure a $10,000 surety bond and file it with the Secretary of State. In addition, Texas debt collectors are subject to the Texas Finance Law. (Read Chapter 392 on Debt Collection and Chapter 393 on Credit Services Organizations - link below).

3. Read and become familiar with the Fair Credit Reporting Act. This act, which is enforced by the Federal Trade Commission, is designed to ensure the privacy and accuracy of one’s credit information. Individuals engaged in debt collection are bound by the conditions in the act. Understand, however, that this is a Federal law. There are additional laws specific to the state of Texas as indicate in the Texas Finance Law (Chapters 392 and 393).

4. Speak with an attorney. As with any new business, you should speak with an attorney to ensure that you are operating legally and within the limits of Texas law.

5. Confer with an accountant. You’re in business to make money so it goes without saying that you should have a financial advisor to instruct you on the best way to set up your home based debt collection agency from a tax and income generation point of view. There are many tax benefits to having a home-based business and you want to make sure that you take advantage of them all on both a Federal and state level.

6. Set up your home office. You can start your home based debt collection agency with a computer, a dedicated phone line and a website. As your business grows, you can purchase the necessary items such as debt collection software, fax and/or copy machine.

7. Get clients. A business isn’t a business unless it has clients. Whether you have to go door to door or attend functions held at the Texas Chamber of Commerce, it’s time for you to get out there and land a few clients.

Tips & Warnings

• Don’t buy anything until you need it. Many people get excited about starting a home based business and invest lots of money only to find that the business they started was not the right business for them. As your agency grows, and your passion for your work grows, then purchase the necessary additional equipment. You don’t want to have a room full of expensive unused equipment.

Resources

• Texas Finance Code Chapter 392 – Debt Collection
• Texas Finance Code Chapter 393 – Credit Services Organizations
• Fair Credit Reporting Act
• Texas Chamber of Commerce Directory

[texascwby]

on 2/7/2009 davenaylor
You would need to purchase a business phone system that would allow you to have the number of lines you would need. You can sometimes find good deals on used equipment on Ebay. I would suggest on your pc that you invest in a small server and use your intranet(within) to link all your pcs thru a network and tele-net into the server to access the files you need.

[davenaylor]

on 11/13/2008 are you aware of any computer and phone system which would allow several debt collectors to work from home at the same time? if not, please direct me to companies that help me set up such a system.
please reply.

dave naylor
[e-mail]