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  • Writer's pictureFair Capital

Top 9 Myths about Debt Collection Debunked

In the world of finance, few topics are as misunderstood as debt collection. Myths and misconceptions abound, often leading to unnecessary apprehension and missteps. To set the record straight, we at Fair Capital have taken it upon ourselves to debunk the top 5 myths about debt collection.

Myths about Debt Collection Debunked

1. Myth: Debt Collection is Only for Large Corporations

Reality: Businesses of all sizes can benefit from professional debt collection services. Small and medium-sized businesses, in particular, can significantly benefit as they often lack the time and resources to chase overdue payments.

2. Myth: Debt Collection Always Ruins Customer Relationships

Reality: Ethical and professional debt collection agencies, like Fair Capital, prioritize maintaining positive customer relationships. Our approach is firm but fair, always respecting the debtor's rights and dignity.

3. Myth: You Can Collect Debts at Any Time

Reality: There are statutes of limitations that dictate how long you can pursue a debt. These laws vary by state and type of debt, so it's important to be aware of the relevant rules in your area.

4. Myth: Debt Collection is Too Expensive to Be Worthwhile

Reality: Professional debt collection services often pay for themselves by significantly improving the recovery rate of outstanding debts. The cost of not pursuing these debts can be much higher in the long run.

5. Myth: Debt Collectors Can Use Any Means Necessary to Collect Debts

Reality: Debt collection agencies must adhere to strict laws and guidelines, such as the Fair Debt Collection Practices Act (FDCPA), which prohibits abusive, unfair, or deceptive practices.

6. Myth: All debt collection agencies are intimidating and employ fear tactics

Truth: Even though some collection agencies might appear aggressive, many reputable agencies stress ethical and compassionate approaches.

7. Myth: Debt collection is solely about monetary recovery

Reality: While recovering unpaid balances is a principal aim, debt collection also entails finding fair and practical solutions benefiting both parties. This frequently includes negotiating payment plans and identifying financial assistance possibilities with patients.

8. Myth: Once a debt is transferred to a collection agency, the creditor loses control

Reality: RCMs should sustain clear communication channels with their collection agency partners, ensuring they comprehend the organization's objectives, principles, and specific account-related concerns. A robust partnership promotes the best outcomes for both the healthcare provider and the patient.

9. Myth: Collection agencies buy all debt for pennies on the dollar.

Reality: While some debt is indeed purchased by collection agencies at a reduced cost, this only represents a small portion of the total accounts handled by collection agencies. In reality, the vast majority of accounts are merely assigned to the collection agency on a contingency basis.

The original creditor maintains ownership of the debt. In these cases, the collection agency acts on behalf of the creditor, applying their expertise to recover the owed funds and then receiving a predetermined commission based on the amount collected. It's essential to understand that each debt scenario is unique and treated according to its specific context and legal parameters.

Understanding the realities of debt collection can help your business manage finances more effectively and maintain healthier cash flows. For more insights and professional assistance, don't hesitate to reach out to us at Fair Capital.


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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