7 Debt Collection Myths That Are Hurting Your Business in the New Year
As we enter the new year, we must leave some misconceptions behind us. There are many myths surrounding the debt collection industry. If taken as fact, they could be hurting your business or your credit score.
Below, Kinum, Inc. dissolves seven of the common debt collection myths. If you have a New Year’s resolution to recover debts from clients or pay your debts, reach out to us. With offices in Indianapolis and Virginia Beach, we serve all of the United States and have an excellent reputation for helping resolve debts.
Misconceptions Surrounding Debt Collection Dissolved
Myth #1: Collection Agencies are Expensive
Some agencies follow the rule that if they cannot collect, you don’t pay, while others charge a flat fee. At Kinum, Inc., we charge a flat rate per contact. However, you will not be charged any additional fees if we cannot recover the debt.
Learn more about how it works to collect with Kinum, Inc. here.
Myth #2: You Have to Pay Debts in a Lump Sum
If you owe more than you can pay back, it’s best to answer the debt collector’s calls and work out a payment plan. The debt collector’s job is to help recover the debt, even if it’s over a period of time. At Kinum, Inc., we work with debtors to create a doable payment plan and erase their debt.
Myth #3: Only Large Debts Get Sent to Collection Agencies
Small debts add up; therefore, any sized debt is eligible to be sent to a collection agency. Some agencies don’t bother collecting on smaller debts, but over time the debts can increase and eventually be turned over to a collection agency. Once the debt hits the agency, your credit score could be hindered, so it’s best to pay off debts right away.
Myth #4: FDCPA Protects Debtors
The Federal Debt Collection Practices Act limits how and how often collection agencies may contact debtors. The FDCPA protects those who owe a debt from abusive or deceptive contact from debt collectors.
Keep in mind the FDCPA does not protect commercial debtors. Many states have statutes to limit the ways collection agencies can contact commercial debtors, but there are no federal laws surrounding commercial debt.
Myth #5: Paying Your Debt Won’t Impact Your Credit Score
Once a debt gets to a collection agency, your credit score has already been impacted. You likely would have been contacted many times to pay your dues before it was sent to the agency. You will only harm your credit score further if you ignore the collection agency’s contact attempts or don’t pay your debts. It’s best to answer the call and pay your debt or work to create a payment plan to protect your credit score.
Myth #6: You Can Just Pay the Creditor Directly
Once a collection agency contacts you, you cannot pass over them and pay the original creditor. Oftentimes, the creditor has sold their debt to the agency, so it is technically no longer theirs to collect on. Collection agencies typically make it easy to pay your debts – even easier than the original creditor. So if a collection agency contacts you, you should be able to pay your debt through an online portal or payment plan.
Myth #7: You Can Ignore Collection Agencies Calls
No, the collection agency will not quit. It will only get worse, and it could obliterate your credit score. Answer the call and consider their options for payment plans to get on a path to paying your debts and recovering your credit score.
As a business, you should treat smaller debts with the same importance as large ones. Small debts add up to large chunks of lost revenue. As a debtor, working out a payment plan to resolve your debts and rebuild your credit score is best. Kinum, Inc.’s goal is to recover debts and understands that you may not have the funds to pay them off right away. Don’t start the new year with a collection of people who owe you money or as a person in debt. Create a plan to settle debts with our assistance today.