Debt is on the rise in the United States – not just among the average family but also within the commercial space. According to TD Bank, gross debt of nonfinancial businesses in the United States has risen by over 7% per year since 2019. Many businesses in New Jersey are still trying to pay off the loans and costs associated with the pandemic. Although it is easy to feel sorry for these businesses, other businesses are often left holding the bill when debt goes unpaid. If your New Jersey business is still waiting on payments from consumers or other businesses, this is an issue that you understand only too well. You are also likely familiar with a range of common legal challenges associated with collecting this debt:
Legal Challenge in Debt Collection Number One: Debtors Have Many Rights in New Jersey
One of the most notable challenges is the fact that the United States and New Jersey provide debtors with a number of rights and protections. Debt collectors must abide by a strict set of rules when attempting to convince debtors to hand over the missing payments. These rules are outlined by the Fair Debt Collection Practices Act, otherwise known simply as the FDCPA. Here are a few examples of these restrictions:
- No contact during unusual times
- No contact at unusual places
- No public posts about your debts
- No harassment
- No direct contact if the debtor is represented by an attorney
That being said, commercial debt is handled by a different set of standards laid out by the Commercial Collection Agency Association – or the “CCAA.” However, the CCAA is not a government organization, and as such it only has jurisdiction over its member companies.
If a company is a member of the CCAA, it must adhere to the organization’s Code of Ethics. This code of conduct applies to debt collection in some situations.
Legal Challenge Number Two: Lack of Information
Another major challenge for commercial debt collection in NJ is the lack of information. It is difficult to track down debtors without the right information. This crucial information might include phone numbers, addresses, email addresses, and much more. Even if a company has contact info on file for debtors, there is no real guarantee that it will be accurate. In fact, some debtors preemptively change their contact information, move to new locations, and carry out other actions because they know they have no intention of paying debts.
Legal Challenge Number Three: The Statute of Limitations
Another common issue is the statute of limitations. Under this law, debt collectors only have a certain amount of time to collect debts. If the statute of limitations expires, the debt is essentially written off as a loss. The specific time limit may vary based on each situation, although it typically ranges from four to six years. In some cases, however, New Jersey allows up to 20 years for debt collectors to pursue unpaid sums. That being said, these time limits can be addressed by taking quick, decisive action alongside a debt collections attorney in NJ.
Legal Challenge Number Four: A Multitude of Simultaneous Debts
When it rains, it pours. This old adage certainly holds true for debts, and sometimes businesses are suddenly overwhelmed by a number of unpaid sums. This is especially common during periods of economic downturn when businesses are suddenly confronted with “credit crunches,” rising interest rates, skyrocketing inflation, and other factors. During periods of cheap lending and economic success, unpaid debts are less common. This means that businesses must be prepared to handle not only a single debt collection, but several debt collections simultaneously.
Legal Challenge Number Five: No Clear Debt Collection Strategy in Place
Many issues with debt collection in NJ can be overcome with a solid debt collection strategy in place. Ideally, companies should create their strategies before it is needed. Speak with a debt collection attorney in NJ to start building your plan today and avoid scrambling to pursue debts in a last-minute fashion.
Contact a NJ Debt Collections Attorney Today
If you are serious about improving your cash flow and collecting unpaid debts, consider working with a collection attorney in NJ. Choose Snellings Law, LLC to get started with an effective action plan, and overcome many of the legal challenges associated with commercial collections. We know that in some cases, getting your money back may seem hopeless. But effective action may be easier than you think. The only way to find out is to book a consultation at your earliest advantage and discuss your options for legal collections. Reach out today to get started.