How to Start a Debt Collection Company?
Owning a debt collection company can mean job security, if the business is built correctly from the start. Regardless of the economy, people will always be indebted to companies, and companies will always need a collection method to retrieve their funds. A good debt collection company has good ethics, obeys the law and still gets the money for the client.
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Instructions
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Choose a payment method. Some debt collection companies purchase debt from creditors for a reduced percentage of the total bill. They then own the debt and whatever they can collect on it is theirs to keep. If they collect nothing, they are out the money they paid the creditor. The majority of debt collectors work on a commission basis. They collect the debt and keep a percentage of of it as their commission. Pick which method you will use for your company.
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Secure a business location. You can work from your home or from an office. Wherever you choose to work, be sure it is free from distractions during business hours and that there is room for an office.
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Comply with your state's debt collection regulations. Some states require debt collectors to register with them so they can oversee the debt collector's practices and investigate of complaints are lodged.
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Name the company. Print business cards, stationery and logo materials with the name of the company. Brochures can be professionally designed, or you can pay someone to design one for you. Have several thousand of them printed for mass mailings.
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Educate yourself about debt collection laws. The Federal Debt Collections Practices Act protects consumers from harassment, threats and other unfair debt collection attempts. For example, it is against the law to contact debtors before 8 a.m or after 9 p.m., and it is up to you to know which time zone the debtor is in so you do not violate the law. Stiff fines are in place for debt collectors who violate any of the debt collection laws. Educate yourself as well as any employees you hire in what can and cannot be done while collecting a client's debt.
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Take a class in locating people. The creditors who hire you will provide a lot of information about the debtor; however, taking a class about how to locate people who do not want to be found can put your company ahead of the rest and increase your collection success rate.
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Send brochures to businesses. Whether you are going to specialize in collecting a particular type of debt, or collect a variety of debt types, you want to send brochures announcing your business to potential customers.
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References
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