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Consumer vs. Commercial Debt Collections

Updated: Jun 18, 2023

How Does Commercial Debt Collection Differ from Consumer Collections?

The debt collection industry is comprised of two different areas of expertise. One is consumer debt collection, also known as Business-to-Consumer or B2C. The other is commercial debt collection, also known as Business-to-Business or B2B.

These debt recovery processes share many similarities; however, there are a few differences between B2B and B2C collections. It's therefore important for anyone looking to hire a debt collection agency to know the key differences to help decide which is appropriate for him.

debt collection agency

Commercial debt collections:

A commercial debt collection agency's purpose is to recover an unpaid debt owed to a company by another company. This commercial debt is usually incurred when a company fails to pay another business for the goods or services they provide.

  1. Commercial debt collection agencies are not regulated under the federal FDCPA. Nevertheless, some states may require that they be licensed or subject to regulations.

  2. Practical collection effort involves communicating with Accounts Payable, a credit manager, and, if necessary, the executive team.

  3. Commercial debt can be reported to commercial credit agencies such as Moody's, Equifax, Experian, and Dun & Bradstreet.

  4. Different strategies and tactics are used when it comes to commercial debt.

Consumer debt collections:

If an individual owes a business money, the business may hire a consumer collection agency to locate the individual and get them to pay the bill. Consumer debt can include personal credit card debts, medical debt, an unpaid mortgage, telephone bills, electric bills, etc.

  1. Consumer debt collection is regulated by the Fair Debt Collections Practices Act (FDCPA), limiting how debt collectors can contact consumers to procure payments.

  2. Collections efforts involve Skip-tracing, which means tracking down an individual and his most accurate contact info.

  3. Consumer debt can often be reported to major credit bureaus such as Equifax Experian and TransUnion, which could affect a debtor's credit score.

  4. Consumer debt is typically lower than commercial debt.

consumer vs. commercial debt collections agency
consumer vs. commercial debt collections agency


Disclaimer: Any and all information is not intended to be, nor is it, legal advice. Please consult your attorney for information concerning allowable rates of interest.

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