In terms of what collection agencies contribute to the United States economy, they guarantee that consumer prices are kept down and that debts are collected. You could become a part of this rewarding field and contribute to the economy in this manner. However, there are some challenges that comes with starting an agency because of the obligations and responsibilities that come with it. Before you think about starting a debt collection agency, here are all of the things that you have to consider first.
The Laws
Before you start any collection agency, it would be wise to familiarize yourself with the laws regarding debt collection agency. There are federal laws that have to be complied with when debts are being collected, and there are a number of acts that directly influence this. Some of these federal acts include The Fair Debt Collection Practices Act, The Fair Credit Report Act, The Health Insurance Portability and Accountability Act and The Telephone Consumer Protection Act.
Out of all of those acts, it is the Fair Debt Collection Practices Act that mainly governs the way that the government can collect debts. Not only that, but it also determines what the rights of the consumers are and what actions can be taken if collectors decide to harass them.
As for the other pertinent acts, agencies need to be aware of a few things. First, they need to understand the importance of keeping consumer information private, for fear out of violating the Health Insurance Portability and Accountability Act (HIPPAA). You also need to be aware of how agencies call in customers to collect a debt and the manner in which consumer information has to be safeguarded. For expert advice on these various topics, Pacific Collection Group are experts in the industry that can assist.
Getting a Business License
Next, you will have to read the laws of your state in regards to getting a business license. While some states do not require collectors to get licensed, the majority of the states do, and it will be your job to research the process behind it. If you collect debt in any state, there is always a chance that you will need one. Requirements in each state vary, but if yo do have to get licensed, there are certain things that you have to do.
First, you will have to complete an application form for a license and pass a criminal background check. Then, you will need to take an exam, obtain insurance policies and provide proof of your net worth. Finally, you need to pay application and licensing fees that comes along with it.
Legal Requirements
You will also have to look at what the legal requirements are of your state to open a business in the first place. Every state has a unique set of requirements that business owners need to comply with in order to run. Certain states only need you to register your business with the states and others may require a license with passing an exam.
There are certain common requirements that most business owners will have to comply with. Getting insurance, applying for a business license, registering your business and getting a state tax ID number are some of the common prerequisites.
Getting a Collection Agency Bond
Getting a collection agency bond will be one of the most important parts of this process, because this bond is a licensing requirement for much of the country. This bond serves as a guarantee to the clients of the agencies as well as the entire state. Both the conditions of the bond and the bond itself will vary by state, but common conditions are shared throughout.
Some of these common conditions include compliance of laws with the state, compliance of agencies with predetermined conditions with clients and that agencies report collection that they make within a certain time frame. In order to get bonded, you are required to pay a premium of the total amount of your bond. When applying, your credit score will be assessed as well as any pertinent financial statements from your business. Your personal assets may also be examined in order to make a determination.
As you can see, there are many aspects of starting a debt collection agency that has to be understood. For further information on the requirements and intricacies of starting a debt collection agency, you can visit Pacific Collection Group