Handling Debt Collection Regulations With Enhanced Collection Software

Many states have tightened compliance rules for collection agency practices as a result of pressure from consumer activists and consumer law firms

. For instance, last spring the New York City Council passed Local Law No. 15. This law significantly altered debt collection requirements in New York City. The new rules were supposed to be put into effect in late March 2010, but it has been increasingly difficult for collection agencies and law firms to implement these rules. Now debt collection agencies are required to record telephone calls with consumers.

If the agencys current debt collection software does not include a call recording system, agencies will need additional time to implement new call recording procedures in order to comply with the rules. As a result, enforcement of the new legislation is being delayed. There have also been a number of compliance questions about the new laws, and some collection software needs to be upgraded to keep debt collection agencies in compliance.

As the number and extent of rules about collection practices increase, it is important for collection agencies to choose collection software that is flexible and easy to use in order to stay in compliance. Infrastructure and internal procedures must change as a result. Rather than worry about compliance issues, many collection agencies and law firms are taking action by suing debtors. Collection agencies that buy debts have proof of that debt, and are legally in a position to file suit against a consumer. Recent statistics indicate a large increase in debt related lawsuits. Until the rules change, it is still legal to sue for a debt owed, and collection agencies are leveraging this right. Those agencies that do not have the means to sue must completely change their procedures to stay in compliance. Some debt collectors fear that the rules will eventually encompass the number of times agencies can dial a consumers phone number in a week!

The problem with using the lawsuit method of debt collection is that many accounts are not lawsuit-worthy. Many debtors who have been downsized will never earn the amount they once did, or they now have a permanent exempt source of income, and a lawsuit will not produce much of a result. Therefore the best way to handle the ever-expanding regulations on debt collection practices is to purchase flexible and powerful debt collection software systems.

by: Sue McCrossin

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