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Difference between Commercial and Consumer Debt Collection

When a business authority decides to engage a debt collecting agency, the first step is to choose between a consumer debt collecting agency and a commercial debt collecting agency. Without the consideration of the differences between these two types of collecting agency, a business owner cannot find the agency capable of collecting their money back in an efficient manner.

Debts

Consumer debt collection:

Consumer debt collectors have expertise in collecting debts owed by an individual to a business authority. These debts cover the medical debt, mortgage debt, loan balances, credit card debt, etc. These debt collection agencies are directed by the act of FDCPA, a major part of legislature designed to protect the consumers who are indebted to business from biased and unfair practices of debt collection. Debt Collection methods restricted by this legislation includes aggravation, harassment, and threats.  The FDCPA comprises of many other laws focused on the safety of the consumers from over-aggressive debt collecting agencies. It is important for the collection attorney to have a complete understanding of the laws of FDCPA in consumer debt collection.

Commercial debt collection:

The other type of debt collection is commercial debt collection, but concerning the order to receive the most effective and efficient service, it is advised to choose the type of debt collector who has expertise in collecting the type of debt your community deals with. Expert debt collecting agencies employ debt collectors who are well trained in their efforts of collecting debts. FDCPA does not administer commercial debt collection. In the commercial collection, the attorney should consider the current position of the debtor’s economy. If the company is shut down the debt is considered as a consumer debt. It is mandatory for the attorney to have a complete understanding of the rules and regulations of all prevailing laws that are related to these issues.

There are pros and cons in collecting each type of debt.

  • Consumer debt works as per the law, while commercial debt collection requires special skills and efforts to uphold relationship with the client.
  • Once the business has a clear understanding of the type of debt they are dealing with, it is easier to collect the debts by engaging the respective type of debt collecting agency.