How to Prevent Debt Collection Confusion
Sometimes clients want to know if they can pursue money on an account after it's been placed with a collection agency. Or, if a client can place an account with more than one agency at a time. While the Fair Debt Collection Practices Act (FDCPA) does not directly address these issues, it does say that if a tactic confuses or misleads the consumer, it may violate a section of the act.
Creditors or Multiple Debt Collectors
Confusion might arise:
If the creditor (your practice) continues to collect on an account. Why? Because the debt might be misrepresented if authorized collection costs are added from the debt collector but not the client.
If an inaccurate consumer credit file results. Why? Because multiple collectors are reporting the same debt.
If the creditor continues to collect. Why? It might confuse the consumer who might not know where to send payment or even if their account is truly in collections.
The bottom line is that your practice needs to cease internal collection activities on bad debt after they place an account with a debt collector. When forwarding the account to another agency, the first collector needs to cease collecting and update credit information.
Payments and Responses
Another thing that happens frequently is that your practice may receive a direct payment from the patient but the payment is not reported to the collection agency for balance reconciliation. The collection agency is still pursuing the dollars placed. This creates a very unhappy situation because most of the time the patient will call the agency regarding a payment already made - especially if they have since received a collection letter. They become even more upset when asked how paid, when paid, check number, check date, etc. Result? Both the practice and the collection agency may be perceived as disorganized and dishonest.
Another situation that occurs is no response from the patient and no reported payment from the client. When payments are not reported or others are collecting on the account in addition to the collection agency, the patient can be erroneously sued or garnished if the client has previously authorized legal pursuit on the account. Again, this casts a poor perception on both the practice and the collection agency and can lead to legal action against your practice.
The Ideal Solution
The ideal solution to all of this confusion is to route all payments to the collection agency. This means if the patient calls the practice to pay or set up a payment plan, the call should be referred to the collection agency. If the patient mails a check/money order, the payment should be forwarded to the collection agency for processing. This helps maintain accountability, reduces errors, and keeps the patient experience positive.