debt recovery

• All medical collection agencies must be HIPAA, FDCPA and GLBA compliant. Without these compliance, they cannot pursue collections.
• If a patient disputes the debt or asks for proof of debt owed, a collection agency must provide adequate documentation, else stop collecting the debt.

Credit Reporting Changes as of July 2022 and April 2023

• Paid medical debt: Collections that have been fully paid no longer appear on credit reports.
• Collection waiting period: Unpaid medical debt now must be in collections for at least one year before it can be reported to credit bureaus. This gives you more time to resolve the debt before it harms your credit.
• Small debts under $500: Medical debt collections of less than $500 will no longer appear on credit reports.

Additional Considerations

• Impact on scoring models: Some credit scoring models, like VantageScore, have completely excluded medical debt in collections from their calculations. This means medical debt can have a reduced impact on patient’s credit score overall.
• State-level regulations: Some states have additional restrictions on how medical debt can be reported, including shorter waiting periods or restrictions on reporting debt for those covered by certain insurance plans.

No Harassment and Intimidation

• Excessive contact: They cannot call patients repeatedly, at odd hours, or contact your workplace if you’ve asked them not to.
• Threats: This includes threats of arrest, jail time, wage garnishment, or any action they don’t have the legal power to take.
• Abusive language: They cannot use profanity, insults, or personal attacks.

No Misrepresentation

• Pretending to be law enforcement or government agents: This is a serious offense.
• Misrepresenting the amount owed: Inflating the debt or adding unauthorized fees is illegal.
• Lying about their identity or the nature of the debt: They must be truthful about who they are and the debt they’re collecting.

No Unfair Practices

• Contacting third parties: They generally cannot discuss your debt with employers, family, or friends (unless you provide specific permission).
• Publicly shaming you: Posting about the debt on public forums or otherwise trying to embarrass the debtor is prohibited.
• Suing patients for a time-barred debt: There are statutes of limitations on medical debt, and they cannot legally pursue debts beyond that time frame.
• Reporting the debt to credit bureaus without first attempting to collect from the debtor: They must make good-faith efforts to collect directly from you before negatively impacting the patient’s credit report.

Here’s a breakdown of the most important factors restoration companies should consider when choosing a collection agency.

Key Considerations

• Industry Experience: Look for an agency with experience in the restoration industry. They’ll understand the unique challenges and nuances of collecting debts related to property damage and insurance claims.
• Fee Structure: Make sure you clearly understand the agency’s fees. Common models include:
  • Contingency-based: A percentage of the recovered debt.
  • Flat-rate: A fixed fee per account.
  • Hybrid: Combination of the above.
• Success Rate: Ask about the agency’s proven track record of successful debt recovery. Inquire about success rates specific to your industry, if possible. Is there an option of credit bureau reporting?
• Compliance: Ensure the agency operates in full compliance with debt collection laws and regulations like the Fair Debt Collection Practices Act (FDCPA). This protects your company from potential legal issues.
• Reputation: Research the agency’s reputation through online reviews, Better Business Bureau ratings, and industry associations.
• Communication Approach: Understand how the agency communicates with your customers. Their approach should be professional and respectful while still being effective.
• Reporting: Inquire about the level of reporting and transparency the agency provides. How frequently will you receive updates on account statuses and collections progress?
• Technology: Does the agency utilize modern technology and software to streamline collection efforts and skip-tracing (locating debtors)?
• Insurance and Bonding: Ensure the collection agency has Errors and Omissions (E&O) insurance and is bonded. This protects you in case the agency makes a mistake that leads to legal action against your company.
• Ethical Practices: Make sure the agency adheres to ethical collection practices. They should treat debtors fairly and with respect, avoiding any practices that could harm your reputation or lead to legal trouble

Questions to Ask Potential Collection Agencies

1. How much experience do you have within the restoration industry?
2. Can you provide references from other restoration companies?
3. What is your fee structure, and are there any additional charges?
4. What is your average success rate for collecting debts in the restoration industry?
5. How do you ensure compliance with state and federal debt collection laws?
6. How will you communicate with my customers during the collection process?
7. What kind of reporting and updates will I receive on the progress of my accounts?
8. What technologies do you utilize for debt collection and customer communication?

Additional Tips

• Get multiple quotes from different agencies.
• Carefully review the contract before signing to understand all terms and conditions.
• Look for an agency that offers a good balance between effective collections and maintaining positive customer relationships.

A nonprofit credit counseling agency is an organization dedicated to providing financial advice and guidance to individuals grappling with debt or money management issues. Distinct from their for-profit counterparts, these agencies are more focused on aiding you in enhancing your financial situation rather than profiting from your difficulties. They are often recognized as 501(c)(3) organizations under the IRS code, qualifying them for tax-exempt status due to their public service mission.

The U.S. Trustee Program maintains a list of approved credit counseling agencies, required for pre-bankruptcy filing counseling. While not all services listed here are non-profit, it’s a good starting point: https://www.justice.gov/ust/list-credit-counseling-agencies-approved-pursuant-11-usc-111

Services Offered by Nonprofit Credit Counseling Agencies

1. Debt Management Plans (DMPs): These plans can help you pay off your debt over a specified period of time. The agency may work with your creditors to reduce interest rates or waive certain fees to make your debt more manageable.
2. Budget Counseling: Counselors work with you to review your income, expenses, and debts to create a realistic budget that helps you live within your means and save money.
3. Credit Counseling: This service includes reviewing your credit report and scores with you, explaining their impact, and providing tips to improve your credit health.
4. Financial Education: Many nonprofit credit counseling agencies offer workshops and resources on various financial topics, including budgeting, saving, managing debt, and understanding credit.
5. Bankruptcy Counseling: If bankruptcy seems like the only option, these agencies can provide the mandatory counseling required before filing for bankruptcy. They can also offer education on the process and implications of bankruptcy.

How They Operate

• Funding: Although nonprofit, these agencies might charge fees for certain services, like debt management plans. However, fees are often low, structured on a sliding scale based on your ability to pay, or sometimes waived. They also receive funding from creditors in the form of “fair share” contributions, which are payments from creditors to the agencies for helping consumers manage their debt.
• Accreditation and Regulation: Reputable agencies are typically accredited by organizations such as the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). They are also regulated by state and federal laws, which helps ensure they operate ethically and effectively.

Fees

While nonprofit credit counseling agencies aim to provide free or low-cost services, some programs or in-depth counseling sessions may incur fees. However, these charges are generally modest and structured on a sliding scale based on your ability to pay, ensuring that assistance remains accessible to those in need. It’s also worth noting that these agencies may receive funding through “fair share” contributions from creditors, which are payments for assisting consumers in managing their debt, in addition to the possible fees for services like DMPs.

Choosing a Nonprofit Credit Counseling Agency

When selecting a credit counseling agency, it’s important to research and verify its credibility and reputation. Look for accreditation by recognized bodies, read reviews, and check with the Better Business Bureau or state attorney general’s office for any complaints. Always ask about fees, services, and what you can expect from their programs before committing to anything.

Conclusion

Nonprofit credit counseling agencies play a crucial role in helping individuals tackle their financial challenges through education, debt management, and personalized counseling. By addressing the root causes of financial problems and providing tools for better money management, these agencies aim to help people achieve long-term financial stability.

A collection agency can significantly benefit the transportation industry by specializing in the recovery of overdue accounts receivable, thus ensuring that companies maintain a steady cash flow crucial for their operational needs, such as fuel, maintenance, and payroll.

These agencies leverage their expertise in debt collection laws and practices, including all federal and state regulations, to efficiently manage and recover debts. This not only allows transportation businesses to focus on their core operations without the distraction of chasing late payments but also helps in preserving valuable customer relationships by distancing the service provider from the often-unpleasant process of debt collection.

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Furthermore, collection agencies can offer valuable insights into credit management and risk assessment, helping transportation companies minimize the risk of future delinquencies. Through their specialized strategies and tools, collection agencies enhance the likelihood of recovering outstanding debts, thereby supporting the financial health and sustainability of businesses within the transportation sector.

Top reasons why Transportation Companies have Overdue AR

• Complex Billing Processes: The transportation industry often deals with complex billing systems due to variable rates, fuel surcharges, tolls, and other logistic-specific charges. This complexity can lead to billing errors or disputes that delay payments.
• Extended Credit Terms: To stay competitive, transportation companies may offer extended credit terms to their clients. While this can attract more business, it also increases the time between service delivery and payment, leading to a higher volume of AR.
• Client Cash Flow Issues: Transportation services are critical for many businesses, but if these clients face their own cash flow issues, they may delay payments to their vendors, including transportation companies.
• Economic Fluctuations: The demand for transportation services is closely tied to the overall economy. Economic downturns or sector-specific slowdowns can lead to delayed payments as businesses prioritize their financial obligations.
• Dispute Resolution Delays: Disputes over service quality, contract terms, or billing can lead to delays in payment. Resolving these disputes often requires significant time and effort, during which payments remain outstanding.
• Inefficient AR Management: Some transportation companies may not have efficient systems or processes in place for managing AR, including inadequate follow-up on overdue invoices, which can lead to increased overdue payments.
• High Volume of Transactions: The high volume of transactions and customers in the transportation industry can make it challenging to manage AR effectively. Small invoices may be overlooked, and the sheer number of transactions can lead to delays in identifying and acting on overdue accounts.
• Reliance on Key Accounts: Transportation companies often rely on a few key accounts for a significant portion of their revenue. If such a client delays payment, it can have a substantial impact on the company’s financial health.
• Regulatory and Compliance Issues: Navigating the complex regulatory environment of the transportation industry, especially in cross-border operations, can lead to delays in payments due to compliance issues or waiting for necessary documentation.