Common Myths in Debt Collection

Medical accounts placed in collection cannot be reported to the credit file.

This is a common misconception. Collection agencies have always been allowed to put medical accounts on consumer credit files.

Creditors ignore certain types of collection accounts, such as medical, when making loan and other financing decisions.

While there may still be the occasional holdout, most creditors these days do not actually view complete credit files. Rather, most see a score that is industry specific. For example, a utility company would see a different score than a car dealership. These scoring models don’t differentiate between, for example, a past due medical bill or a past due cell phone bill.

As a small business owner I cannot afford to pay an agency to collect my debts.

Collection agencies earn the majority of their revenue from commissions on what they collect for their clients. The client only pays if the agency collects but the client still ends up with the majority of the funds. Typically that same account would have never been paid without the unique advantages available to a liscensed credit collection agency, such as proven communication methods and being able to report to the credit file.

While most agencies offer a variety of service options (ex: flat fees, commission or a combination) avoid those requiring a minimum number of accounts, large up front fees or lengthy contract periods.

My in-house staff sends letters and makes calls on past due accounts just like an agency, so there is no reason to pay someone else for these services.

What are the consequences to your customers if they don’t pay? What collection training did your staff receive? As a debt collection agency, there are consequences to ignoring our letters and phone calls. We have the ability to report your accounts to all three major credit reporting agencies. Our collectors are specifically trained on educating debtors about the long term effects of bad credit and use effective negotiation and communication techniques to maximize collections.

Using a debt collection agency will cost me customers.

Utilizing the services of a reputable, professional agency should never cost you business. Most consumers expect that they will be subject to collection efforts if they fail to pay their bills on time. The key is to make sure the agency conducts business in the same ethical way you do.

There is no point in turning over older accounts because in NC there is a 3-year statute of limitations on debt collection.

The statutes only limit the time frame in which LEGAL action (such as judgments) can be taken. The collection practices we utilize (phone calls, collection letters and listing on credit files) are not considered “legal” action, therefore, not subject to this statute of limitations.

If a debtor makes any sort of regular payment on their balance, even if it is just a $1.00, they cannot be placed for collections.

This is only true if there is a signed agreement between the creditor and their customer that stipulated that a $1.00 monthly payment would prevent the account from going to collections, and the payment was received on time every month. If there is no formal payment agreement in place to prevent it, past due balances can be turned over for collections even if payments are being made, regardless of frequency or amount.

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