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My startup received a letter from a collection agency. We dispute the debt since we never agreed to pay the purported creditor anything and there is no signed contract. In googling about how to fight back against a collection agency, most sites refer to consumer debt, and I suspect that the process for disputing is different for business debt since the U.S. Fair Debt Collection Practices Act specifically addresses consumers. Any advice for disputing debt with a collection agency? |
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If I were in a business situation like that over a substantial amount of money, and really felt I owed nothing to the purported creditor and they had no leg to stand on, I'd call my business attorney. But if I didn't have the money for that, I would write a letter demanding evidence that I owed the money and the collection agency "owned" the debt and was authorized to collect it, and that I would consider a failure to respond within ten days a prima facie admission the debt was not valid. Then I'd send it certified mail, return receipt, and keep a copy and staple the certified mail receipt to it, and add the return receipt when it came back. That would give me a paper trail in case things went any further, and the return receipt puts the collection agency on notice that doing exactly that. My wife and I have both gotten bogus collection letters I've dealt with that way - hospital visits we never made, etc. In each case, the collection agency has dropped the attempt immediately. A very nice lady at one of them admitted that sometimes, when somebody just skips out on a bill, the agency finds other people in the area with the same name and hopes somebody will be gullible enough to pay it. If they threaten a suit, and you're really confident there's no credible reason you'd owe the money, you could mention malicious prosecution. I found out about that from a guy who was sued by a collection agency over a business deal, and the person who referred it to the agency didn't give them all the facts. The guy actually wasn't on the hook for the debt and gave credible proof to the agency, but they proceeded to trial anyway. It was an open-and-shut case decided in his favor, and his lawyer told him he could countersue to recover malicious prosecution damages as well as legal fees, but he decided to just let it go. |
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Bob's answer is spot on. I'd add that collection agencies normally stay just this side of the law when doing their job and occasionally cross the line when need be. A few years back an aquaitance worked for an agency and shared many a story with me about their tactics. It's not pretty. Establish the paper trail as mentioned above then wait. Be careful not to engage in any daily back and forth about the issue, it only encourages them. Make it clear to them that you've already made your response via certified mail and are unwilling to spend any more time re-hashing the issue. The next step is thermonuclear war. |
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