Can a Law Firm Be a Debt Collector?

Bankruptcy Law Firm

It can be a confusing and jarring experience: You fall behind on debt and receive a letter from a law firm demanding you pay up immediately. Are you about to be sued? Could you go to jail? Is this just another debt collections trick? Many people have found themselves in this position and have been confused about whether a law firm can actually be a debt collector. Whenever you are faced with a debt-related document that seems to imply legal action is pending, it may be a good idea to talk to a bankruptcy attorney. Here are a few important things to know in the meantime.

Are Collections Agencies Law Firms or Vice Versa?

Firstly, a collections agency and a law firm specializing in debt are two very different things. In fact, the differences between these two entities directly influence why your creditor chooses one or the other to recover debt. Key differences surround:

  • Filing lawsuits: Collection agencies can pursue debtors via phone or mail, but they cannot file a lawsuit. A law firm specializing in debt collection can, potentially securing a judgement that lets them garnish wages, places liens and take other steps to settle debts. This is also seen as an advantage because it can pressure debtors to pay up.
  • Legal Knowledge: A collection agency is not a legal entity and its employees have limited knowledge of the law. Debt lawyers, on the other hand, are qualified to give advice on legal procedure.
  • Professional standards: Debt-focused lawyers are typically bonded, insured and licensed by a state labor department as well as being subject to the oversight of state bar associations.

Can a Law Firm Keep Contacting Me?

Federal and State prohibit debtors from contacting you without revealing their intention. A creditor communicating via a law firm revealing is not breaking any laws. Many times, a letter that appears to come from an actual attorney is just a pre-written correspondence on the attorney’s behalf. However, in some states, this is considered a form of creditor harassment and participants may be subject to hefty fines. A skilled attorney can help you know if your state prohibits this behavior.
Dealing with creditors and sorting through debt can be stressful enough without being subject to sketchy collections tactics. If you’re ready to sort out your finances and shut down harassing letters, phone calls and emails, talk to a bankruptcy law firm in Memphis, TN today. Get your financial future back on track and find peace of mind.

Thanks to Darrell Castle & Associates for their insight into bankruptcy law and debt collectors.