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Common Mistakes Creditors Make When Collecting Debts

 Posted on August 30, 2023 in Debt Collection

Chicago, IL debt collection lawyerWhen it comes to debt collection, creditors may face a number of challenges. Recovering debts can be a complex and time-consuming process, requiring careful navigation of legal guidelines and effective communication with debtors. However, many creditors make mistakes that can hinder their chances of successful debt recovery. By understanding these pitfalls, creditors can improve their chances of collecting outstanding debts. A skilled debt collection attorney can provide guidance in these matters, ensuring that creditors comply with all legal requirements.

Failing to Send Written Notice

One major mistake creditors often commit is neglecting to send a written notice to the debtor regarding overdue payments or unpaid balances. According to the Fair Debt Collection Practices Act (FDCPA), it is mandatory for lenders or collectors to provide written notice within five days after initial contact with the debtor.

Sending a legally compliant written notice serves several purposes:

  • It informs the debtor about their outstanding balance

  • It specifies what actions need to be taken by the debtor

  • It initiates an official paper trail for future reference

  • If needed, it provides evidence in court should legal action become necessary

Misrepresenting Debt Amounts or Terms

Creditors sometimes mistakenly misrepresent either the actual amount owed by a debtor or certain terms associated with repayment plans. Engaging in deceptive practices like inflating debt amounts or exaggerating potential interest rates not only violates federal laws, but it also damages trust between the creditor and debtor.

To maintain ethical standards during debt collection processes, it is important for collectors to accurately communicate all relevant information concerning outstanding debts. This includes providing accurate details about payment deadlines, interest rates, applicable penalties, and any potential consequences for non-payment.

Harassment or Threatening Language

While creditors have a right to pursue the collection of unpaid debts, they must do so within legal boundaries. One common mistake made by creditors is engaging in harassment or using threatening language toward debtors.

The FDCPA clearly prohibits actions such as:

  • Using obscene or profane language when communicating with the debtor

  • Making repeated phone calls with an intent to annoy the debtor

  • Publishing a list of individuals who owe money (except for credit reporting purposes)

  • Falsely claiming affiliation with law enforcement agencies

To avoid violating debt collection laws and maintain professionalism during the process, it is crucial for collectors to pursue recovery through ethical means.

Inadequate Documentation

An essential aspect of successful debt collection is maintaining comprehensive records of all interactions and transactions related to outstanding balances. Sadly, many creditors neglect this important step in the process, leading to difficulties later on if legal action becomes necessary.

Creditors should carefully document each communication attempt (e.g., phone calls, emails) along with information on dates, times, participants involved, and issues discussed. Additionally, keeping copies of written correspondence like letters sent to debtors can prove invaluable if disputes arise later on.

Contact Our Cook County, IL Debt Collection Attorneys

If you are facing challenges as you collect outstanding balances from your borrowers, the Chicago creditors’ rights lawyers at Dimand Walinski Law Offices, P.C. can help alleviate these burdens. We have extensive experience representing clients in debt collection matters, and we can guide you through the legal complexities involved in recovering debts.

By receiving assistance from our team, you can not only streamline your debt recovery process, but you can ensure that your actions remain within legal boundaries. Do not let the mistakes described above jeopardize your chances of successful debt recovery. Contact us today at 312-704-0771 to schedule a consultation and get the legal help you need with issues related to debt collection.

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