Do Debt Collection Agencies Progress Lawsuits to Trial?

The United States Court of Appeals for the Seventh Circuit has recently ruled that debt collectors are not violating the law if they file a lawsuit against a debtor but then do not go to trial; in fact, according to the ruling, even if debt collectors never have any intention of actually going to trial, they are still not breaking any laws, nor do their actions qualify as illegal “deceptive threats,” which are outlawed by the Fair Debt Collection Practices Act.  

The reasoning behind the Seventh Circuit’s recent ruling is three consumers who brought suit against debt collection agencies for filing suit against them without, according to the consumers, actually intending to take them to trial. The consumers argued that the debt collection agencies simply wanted to obtain a default judgment or settlement that they could collect on, proven by the fact that they later had the lawsuits voluntarily dismissed.

Both the lower courts and the Seventh Circuit eventually dismissed the suits brought forth by the consumers, saying that the collection agencies were within their rights and were not violating any Fair Debt Collection Practices Act laws. The court also ruled that filing a lawsuit does not mean that debt collectors are required to progress said lawsuit to a trial and that, furthermore, trials are not typically cost-effective, simple, or fast, which makes it understandable that many debt collection agencies would avoid trials whenever possible.

However, it is important for debt collectors to understand that other rules and laws related to fair and legal debt collection do exist, such as the fact that debt collectors are required to have and provide verifiable proof of the debt they are attempting to collect upon and its existence. Fortunately, though, in this one instance, the courts sided with debt collectors, which doesn’t tend to happen a lot. Thus, debt collectors are encouraged to continue doing their best to act legally and in the best interest of their clients at all times to avoid finding themselves facing lawsuits which may not turn out as well as this one.

Making the Software Switch

When collection agencies choose to use a new legal collection software program, they have a big task ahead of them. First, they have to examine various types of software that are available on the market and narrow the wide selection down to just a few programs that meet their unique needs. Then, their next step is to purchase the software and get it up and running.   

It’s that last part, the “up and running” part, that can take awhile. Getting started with new software isn’t just about getting it “hooked up;” it’s about learning to use it as effectively as possible, getting used to it, and learning its ins and outs. And, sadly, it often seems as if no sooner has a business learned to use a particular software program, then it’s time to upgrade to another one!

To help reduce the time between moving from one software to the next, businesses are advised to be extremely cautious and thoughtful when choosing collection software. First of all, they need to make sure they know all of their needs and how the software will match each of those needs. They also need to make sure they have staff on hand who can handle using the newest and most up to date software programs.

Collection agencies especially need to have a clear idea of how much “hands on control” they wish to have with their software. Agencies that want to handle most processes on their own are going to need to go for a more involved software than agencies that don’t mind the vast amount of their internal processes being automated. It’s really a matter of preference, but it’s important for business to know and understand its unique preferences so that it doesn’t end up with software that is a bad fit.

Businesses are also encouraged to take the time to actually “test drive” the software when possible. This could be through a temporary download of the program or through a temporary online version. Seeing software in action, even for a short time, can help businesses to know whether or not a particular software program will work for them and with the way they do business. Even if trial programs aren’t readily available, businesses are encouraged to ask about them since many software companies will offer trials if requested.

Of course, in this day and age, it is imperative that collection agencies go the extra mile in ensuring that any software they choose is very secure since they cannot risk private or sensitive personal information being leaked. In fact, it is advisable that collection agencies go with software companies that stand behind the security of their programs and that take full liability for any breeches of security. Finding such a company can be difficult, but it’s worth it for the added protection.

Getting the right collections software takes a lot of thought and consideration and can sometimes be pricy, but when businesses don’t rush it and take the time to get the perfect program for their needs, they’ll be much more satisfied with their software for much longer!