Are there limitations to collect on debts during COVID-19?

debt collection in COVID-19
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It is remarkable how, in just a few months,  the coronavirus pandemic has completely changed the way we do business physically and how financially strained we have become as a nation. If you are a business owner whose life has flipped upside down as a result of this situation, then it will be extremely helpful for you to know your rights when it comes to collecting debt during this increasingly worrisome economy. In this article, we’ll go over what you need to know about debt collection in COVID-19 and what your limits are to collecting debt and whether or not the courts can strictly uphold these limitations. 

Preparing Your Business For State Pushback

As a result of states protecting their constituents from even greater economic toll and hardships, several states have begun to implement restrictions on debt collectors communicating and requesting customers to pay off debt. In Massachusetts, for example, the attorney general has called for regulations that prohibit debt collectors from initiating, filing, or threatening to file any new collection lawsuits during the pandemic and for 60 days after it has ended. Washington D.C. has taken the exact same steps while Nevada has ordered all collection agencies in the state to close and “cease collection efforts with Nevada”. Other states including California and Illinois have been less authoritative and have “encouraged” debt collectors to accommodate consumer’s COVID-19 related hardships while recommending the suspension of collection activity for 60 days. 

Whereas California and Illinois have proposed less severe mandates, Massachusetts has been more forthright and has required that the communication between collectors and customers be solely for the “purpose of informing a debtor or discussing a mutually agreeable date for a rescheduled court appearance”. 

How Collection Agencies Have Pushed Back

The interesting about this situation is that the agencies themselves have pushed back and filed court reviews on the basis that consumers may no have more time to deal with accounts and may have more money to allocate towards debt reduction as a result of the stimulus and unemployment funds that have been pumped into the economy by the federal government. Additionally, agencies have also noted that a restriction in contact or communication with customers via telephone violates aspects of the First Amendment’s right to free speech. This has resulted in the courts barring enforcement of regulations pushed by Massachusetts and Washington D.C. despite their argument that consumer’s financial situation during the coronavirus is “extremely important”. Additional arguments against state attorney generals include collection agencies and businesses have the right to petition the government as well as file lawsuits

So what does this mean? If you are a business, you have the legal right to contact the individuals that owe you money even during the pandemic or “State of Emergency” situation.  While this has been the case in Massachusetts, it is still a matter of contention in other states that have not provided specific rulings yet. 

Maintain and Know Your Rights As A Creditor

Despite the current economic and COVID-19 conditions, if you are a business and are owed money, we maintain that you have every right to collect said money whether it be through a private agency or a court-mandated process. 

The method of debt collection can include contacting the debtor personally. However, if this fails then the business can transfer the debtor’s account to a debt collection agency that can request the amount owed on behalf of the business. Additionally, secured transactions where the debtor gives the creditor a claim to the debtor’s property is also possible. 

If the above solutions result in a stalemate, businesses can file court proceedings where they have the option to seize the debtor’s property. If this fails, then the business can file a lawsuit against the customer that can go to trial. However, these are extraordinary times so an attorney that can stop the process from getting both parties into a trial situation is ideal. 

Contact A Skilled And Experienced Attorney

During the era of COVID-19, business debt collection is an extremely sensitive topic that should only be handled by attorneys with several years of experience in debt collection. If you find yourself in this situation, do not hesitate to reach out to us as soon as possible. We are keeping our finger on the pulse of this matter and look forward to making sure you collect whatever you are owed as granted to you by your rights in the United States. 





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