While doing business in New York City, you’ll likely encounter customers or clients who won’t pay. Regardless of the amount, unpaid debts can pile up and negatively affect your bottom line.
Ensuring that debts are paid on time is critical to maintaining smooth cash flow and preventing losses. However, debt collection—especially in New York—can be a tricky area to navigate for business owners.
Debt collection in NYC requires in-depth knowledge of both federal and state regulations because a single misstep can result in more than just angry customers. Instead of getting your money back, your business can be sued by the parties from whom you’re trying to collect. For this reason, it’s important to work with professionals who are adept at and experienced in debt collection in NYC.
Debt Collection in NYC: Legal Restrictions
While you can file a lawsuit against a debtor that refuses to pay, keep in mind that they can also sue your business or your debt collector if you’re found to be in violation of consumer debt collection laws.
New York’s debt collection laws are the most stringent in the country. Consumers within the state have many protections against unscrupulous debt collection practices, thanks to amendments to existing debt regulations enacted by the New York State Department of Financial Services in 2015.
Debt collectors must abide by these regulations; otherwise, they risk being reported to the NYC Department of Consumer Affairs for violations against state debt collection laws.
Meanwhile, the debtor can also file a complaint with the Consumer Financial Protection Bureau, the organization that enforces the Fair Debt Collection Practices Act (FDCPA), for violations against federal debt collection laws.
According to these regulations, debt collectors cannot:
- Use harassing, threatening, or abusive language
- Discuss the debt with the debtor’s family, friends, or employer
- Falsely claim to be an attorney or to be working for a government agency
- Make misleading statements regarding the amount, character, or legal status of the debt
- Call debtors repeatedly to annoy, threaten, or bully them into paying
- Call debtors that have sent a cease letter
- Send fraudulent legal papers
- Solicit postdated checks so that they have recourse to file a criminal case against debtors
Collecting on a Debt Legally
When faced with nonpaying clients or customers, many businesses in NYC work with a licensed debt collector. Abiding by city, state, and federal regulations, the debt collector will be responsible for:
- Requesting the consumer’s language preferences
- Providing debtors with information about their rights
- Giving disclosures about prohibited practices under the FDCPA
- Providing information about the amount owed and other details of the debt
- Presenting proof that the debt belongs to the consumer
Apart from making sure your business doesn’t run afoul of the law, a debt collector can also help preserve your business’ reputation by remaining honest and respectful throughout the entire process.
How Serve Index Process Servers Can Help
As part of the collections process, the person or business owing the debt must be served with a demand letter. This is typically sent after you or your debt collector have sent written general reminders and inquiry letters. The demand letter is an official notification to the consumer of the outstanding debt. It includes details, such as the total amount owed, and indicates their obligation to pay in full.
If the consumer still does not pay, you or your debt collector will send a late payment before action (LBA) letter. This type of written notice is more forceful in tone, outlining your intent to pursue legal action if the consumer does not settle their debt.
In some cases, debtors intentionally make it difficult for collectors to find them and serve these notices. They may leave town or move to a different address without informing their creditors. Even if they do receive the notices, they might choose to ignore them.
Serve Index LLC process servers can help. We can hand-deliver your collection letters to their intended recipient anywhere within New York City. Additionally, we can serve lawsuit papers if collection attempts have proven to be futile.
Our team is highly knowledgeable about the restrictions on serving debt collection notices, and you can trust them to perform this service professionally.
Also, if you suspect that the debtor has plans to hide from you or has already left town, let us know. You may utilize our skip tracing services along with our debt collection solutions.
Get in Touch
Serve Index LLC team serves debt collection papers for student loans, rent debts, unpaid medical bills, credit card debt, and more. Our team understands how important the payment of debts is to your business, and we will act as your trusted partner in asserting your right to collect.
To learn more about our services, reach out to us. We are open 24/7, and we’ll be more than happy to assist you with your debt collection needs.