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Sacramento Small Business Debt Collection

September 25, 2012

There are many small businesses in the Sacramento area that offer consumer financing for larger purchases or installment contracts so that the consumer does not have to pay in one large lump sum. One major benefit of financing is that the small businesses can collect interest on the payments in exchange for the convenience of smaller payments on the part of the consumer. Similarly, small businesses benefit from installment contracts in that the business does not have to deliver a finished product or service before receiving partial payment.

In some cases though, consumers break their promises to pay the remaining balances. When this happens, businesses and their agents are free to engage in actions to collect the debt. However, there is one major caveat: the debt collection practices must comply with a federal law called the Fair Debt Collection Practices Act (FDCPA). This is where an experienced Sacramento small business attorney can be a valuable asset to the small business, acting as a consultant on FDCPA compliance.

In general, the Act is designed to protect debtors from fraud and harassment in the collections process. For example, before the Act, it was commonplace for debt collectors to insinuate that the debtor was committing a crime and that the debtor could go to jail if the debt was not paid by a certain date. Debt collectors would call the debtor's residence up to dozens of times a day, or find the debtor's place of business and call there as well. In extreme cases, intimidation and threats of violence were used to induce prompt payment of debts. It is not surprising that these types of debt collection practices do not fly in the modern business world.

Under the Act, debt collections are reduced to a set of heavily-enforced rules. Collectors may not call a debtor before 8 a.m. or after 9 p.m. They also may not contact the debtor's place of business if the place of business objects to those types of calls (most do!). Anyone collecting a business debt may not hold themselves out to be an attorney or insinuate that some sort of legal process has begun unless the legal process has in fact begun. Debtors are entitled to write a letter to a debt collector demanding that the collector cease and desist all calls, letters, faxes, and other communication about the debt. Once this right has been invoked, the debt collector must not send any additional communication unless it is a receipt of the debtor's demand or a letter informing the debtor of the commencement of a legal proceeding.

Sacramento business lawyers recognize the right of a small business to collect any debts owed to it. However, a business can get in a lot of trouble with the federal government if its debt collection processes do not comply with the Fair Debt Collection Practices Act. Therefore, it is in every small business owner's best interest to consult an attorney for advice as to the proper way to engage in debt collection practices.

Client Reviews
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Kristina Reed handled the legal work of creating a corporation for my photography business in the state of California. She was extremely professional to work with and very prompt in her response times. She explained everything in language I could understand and helped me navigate the process smoothly from start to finish. I was very happy with her services and will definitely return to her for any future needs! Amy W.
★★★★★
As the co-owner of a small business, the process of selling assets was overwhelming. It was great to have [Kristina Reed's] advice throughout every step of a very demanding and hectic process. We were very pleased with [Kristina Reed's] class, focus and approachability. [Kristina Reed] always acted as a valued associate to the company and became a reliable advisor. Furthermore, we thank [Kristina Reed] for [her] calm encouragement when it was most needed would recommend [her] expertise unequivocally. Todd S.
★★★★★
I reached out to Kristina to assist with drafting some contractual real estate paperwork, and was not disappointed. She provided a prompt response and was very helpful in accommodating my request. Her expertise ensured a thorough conclusion. I would gladly recommend Kristina to other individuals needing real estate expertise. Stephen R.
★★★★★
I'm extremely impressed with my experience with Kristina Reed. I used her services to negotiate a commercial lease in Folsom. Our agent had actually recommended a few attorneys to us but we didn't feel comfortable with any of them. I was very impressed with Kristina on our first conversation. The landlord group was one of the hardest you can find to deal with. There were lots of going back and forth but Kristina's knowledge and experience made my life very easy. She was always quick to get back to us whenever we have questions. She pointed out issues on my lease that my previous lawyer totally missed. I recommend Kristina's services to everyone I know. My friend just used Kristina's services for his lease negotiation in Davis and he was very impressed as well. Devin B.