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Businesses purchasing of others debts

Commercial debt collection is already heavily regulated at the federal level with a complex set of rules laid out in the Fair Debt Collections Practices Act (FDCPA).  As we have previously mentioned on this blog, California has implemented additional standards under a recent bill signed by Governor Jerry Brown known as the Fair Debt Buyers Practices Act.

This new California statute would prevent businesses that are collecting on debts from bringing any litigation without first verifying ownership of that particular debt.  Possibly more important concerning commercial collections are regulations put in place regarding businesses that are buying debts from other agencies.

The purchasing of debt is increasingly becoming more important part of the commercial debt collection practices. One particular collection business saw a 17 percent increase in the collection of debts that they had purchased from 2012 to 2013.

With the new legislation, any company in the business of purchasing debts must understand that they will be held accountable to the same standards as would the original debtor. The statute of limitations upon that debt would be the same and there are certain practices that are forbidden. Care also needs to be taken when making calls across state lines out of federal law concerns.

Businesses do have options when it comes to the collection of debts.  However, following California's passage of the Fair Debt Buyers Practices Act, these businesses are now facing stringent state regulation as well as federal regulation.  

It's always a good idea for such businesses to consult with debt collection attorneys that have experience working in the area of commercial collections.  These attorneys can provide options and alternate strategies for collection of debts that are in compliance with state and federal law.

Source: Visalia Times-Delta, "Govern signs bill that holds debt collectors to stricter standards," Valerie Gibbons, July 12, 2013