Businesses will always find themselves in situations where customers who have received loans are unable or unwilling to repay. The most difficult economic times bring you more opportunities, but on the other hand, the difficult times are those when debtors are least able to repay. Your most effective tool will be your power of persuasion – the same tool you use to get payments from debtors. Presenting offers over the phone or face-to-face at networking events is often the best way to promote your business. Since each state has different rules and regulations, you`ll need to do the necessary research to determine which laws to look out for. That being said, there are certain federal laws that debt collectors must comply with. If an agency is not open about its practices and you later discover that it is too aggressive, that agency and possibly your business may be sued by the debtor. When registering a business name, we recommend that you search for your business name by checking: If you want to be successful with your debt collection agency, you need to make sure you understand state and federal laws. Negligence is no excuse for being reprimanded for non-compliance with these laws. Your plan should include the states in which you want to collect.

I would suggest purchasing errors and omissions insurance and general liability insurance, and then looking for states where you don`t need a collection agency license. Or you can focus on a few states that require registration and licensing. Although you can pass this debt on to a debt collector, they still represent your business. They need to know how they will represent you, how they will work with you, and what relevant experiences they will have. The next thing you need to do is choose a legal structure for your debt collection company. There are several options, including: • C Corporation – Offers the greatest limited liability protection to its shareholders, but is among the most complex business structures with extensive requirements • S Corporation – Offers some of the same benefits as a C Corporation, but is an intermediate unit • Limited liability company – Provides limited liability protection to owners and can be owned by one or more • Partnership – structure established by two or more owners as part of a partnership agreement • Sole proprietorship – The simplest corporate structure that does not offer liability protection For most businesses, it`s a good idea to choose a structure that offers some liability protection to protect your personal assets in case your business is sued. Many new business owners choose to structure their businesses into limited liability companies (LLCs) because they can be easily formed. There are significant costs associated with starting your business unit, such as forming an LLC and sorting trademarks, copyrights, and patents.

It may seem obvious, but before hiring a debt collection agency, you need to make sure they are qualified and licensed to act as a debt collection agency. Another notable insurance policy that many companies require is workers` compensation insurance. If your company has employees, chances are your state will require you to purchase workers` compensation coverage. You should also be a good judge of character. This will not only help you while you`re negotiating payments, but also when you start interviewing potential debt collectors as you grow your business. A certain level of collection experience may be required before opening your own business. Many businesses fail because a good collector should have stayed on the collection floor, but instead tried to start their own business. So, if you enjoy working as a home collector and don`t want to deal with everything that goes into running your own collecting business, I suggest you join one of these types of organizations.

A comprehensive knowledge of the Federal and State Fair Collection Practices Act and the Telephone Consumer Protection Act is essential. No debt collector should pose as some kind of law enforcement officer, repeatedly call at the wrong time, or collect debts that cannot be verified.