Debt Collection: Understanding the Common Legal Issues When Making Contact

4 January 2018
 Categories: Law, Blog


Selling goods on credit can be beneficial for your business. In simple terms, this purchase option is favourable in increasing profit because it allows the buyers to spend more on your merchandise without the stress of immediate payment. The practice also promotes good relationships with customers, ensuring better retention of clients. Unfortunately, not all debtors will pay for the obtained merchandise on time. In such cases, you will need to contact the customer to request payment. If you are handling debt collection for the first time, you should consider this short discussion on the common legal issues to consider when making contact.

Purpose of Contact

You should have a clear objective when contacting a debtor. Legally, you can only contact a person who owes money for a reasonable purpose. If you exceed these legal boundaries, you will be conducting an illicit action. However, you should note that the reasonable purpose encompasses all the actions necessary for the collection of your debts. For instance, you can contact the debtor to demand payment, to provide information on the account, to explain the consequences of defaulting, to arrange for repayments and to investigate the circumstances. However, embarrassing, harassing or demoralising the debtor is not considered reasonable or acceptable.

Contact Location

There are different forms of communications which can be employed during the debt collection process. The most reasonable methods are telephone and writing. However, you can also arrange a face-to-face meeting as a last resort. Regardless of the method chosen, it is important to ensure that the location of contact remains appropriate. A creditor should not contact the debtor in a place which would violate their privacy. Ideally, a debtor should be contacted in their home through the provided telephone or address. However, if the individual does not wish to be contacted in their home, you can ask for a reasonable alternative. If you do contact the debtor at their work, you should be cautious not to violate your privacy obligations.

Frequency and Hours

Finally, you should note that debtors are entitled to live a life free of excessive communication. If you keep contacting the concerned individual, the action could be interpreted as harassment. Therefore, you should avoid unduly and unnecessary contact with the debtor. Allow an appropriate interval between the sessions of communication. You should also remember to make contact at reasonable hours, preferably during business hours.

Debt recovery can be a complicated and legally challenging process. Therefore, you should seek professional guidance to avoid the common legal pitfalls.