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Archive for the ‘Florida Debt Collection’ Category

Debt Collection in Florida Advice for Loans

Sunday, September 30th, 2018 | Florida Debt Collection | No Comments

Should You Lend Money Friends or Family?

Debt collection is The Cash Flow Group’s specialty and we are here to help!

It is a well-known rule that lending money to family members or friends should not be done. Shakespeare admonishes us with his immortal words, “Neither a borrower nor a lender be.” However, it is the words that follow that inform us of the consequences, “For loan oft loses itself and friend.” This is just as true today as it was in the time of Hamlet — if you loan money to a friend or family member, you can expect to lose both the money and the relationship. In a money-etiquette survey it was found that 57% of people have seen a relationship ruined because the borrower didn’t repay the loan. Still, many people who are in a position to do so feel compelled to help a close friend or family member in their time of need; and that doesn’t have to be a bad thing as long as you go about it with your eyes wide open.

Here are some things to consider when your friends asking for money:

What’s More Important – Repayment or the Relationship?

If someone approaches you for a loan, chances are they aren’t creditworthy enough to qualify for a loan from a lender. So, you know going into it you are taking on the risk of not seeing all or some of the money again. The question becomes whether repayment of the loan or the relationship is more important to you. You should know in advance how you would handle a situation in which the borrower gets behind on payments or no longer returns your calls. You can expect things to get very awkward, especially if the person is at family events or around town. Alternatively, if you truly value the relationship, you can treat the loan like a gift.  The person will likely try to repay you as if it was a loan, but the pressure is off the relationship.

Are You Helping or Enabling?

While you may have the right intent, you may be hurting the very person you are trying help. If the person needs money to cover basic living needs or to pay off credit card debt, loaning them money may only exacerbate their financial problems. What they might really need is financial counseling or help with finding alternative sources of income. If you do loan them money, do so under the condition they seek the help (or offer it yourself) they need to turn things around.

Don’t Make it Open-Ended.

The problem with loaning money to a friend is they are often open-ended based on a handshake with no specific terms for repayment. That leaves both parties in a state of limbo with no expectations as to when the loan is to be repaid. It also creates a false notion in the mind of the borrower that there is no sense of urgency to repay the loan, especially when other things come up that relegate loan payments to low priority status. Without clear expectations or specific loan terms, it becomes difficult to approach the borrower about payments. If you are going to loan money, put it in writing with specific terms.

Is the Loan IRS Compliant?

Lending money to family or friends is often interest free, which is not a good idea.

First, it diminishes the value you place on the money you loan someone; secondly, it could put you at odds with the IRS. Charging interest is not unreasonable, especially when it is done at below-market rates. The IRS expects you to charge interest on a family loan if you don’t want it to be treated as a gift for tax purposes. The IRS doesn’t care about small loans made to children. Loans of $10,000 or less are not subject to gift tax rules if they are not used for investments. However, larger loans could show up on the IRS radar if appropriate interest is not charged. To avoid treatment as a taxable gift, the loan needs to be in writing with the amount, terms, and rate of interest clearly defined. The IRS requires a minimum interest rate to be charged which is reported as income by the lender. If the loan is made for a down payment on a house, the borrower may deduct interest charges, but the loan must be secured by a lien on the home.

What are the Alternatives?

One alternative is to just say “no.” That may be hard to do, but, in many cases, it could be the right thing to do. Or, you can say “yes,” but with conditions. First, is that they at least try to obtain a personal loan on their own. While you don’t want them to get stuck with a “payday” type loan, there are alternative lending sources which can offer reasonably priced personal loans for people with less than good credit.

The Cash Flow Group is here to answer any questions or concerns you might have about loaning money.  Contact us today!

Debt Collection in Florida

Tuesday, September 25th, 2018 | Florida Debt Collection | No Comments

DEBT COLLECTION MYTHS BUSTED

Debt collection can be a taboo subject. There’s a lot of misinformation about debt collection floating around the internet, so The Cash Flow Group is here to set the record straight. Here are the biggest myths about debt collection busted:

You Can Pay the Original Creditor Instead of the Debt Collector

Other companies hire debt collection agencies to collect for them, called third party agencies. Or, they sell their debt to a collection agency, meaning the original creditor no longer owns the debt. Either way, the collection agency is contacting you for a reason and you cannot bypass them. The good news is, however, that most collection agencies make it as easy as possible to pay back a debt.

Debt Collections Won’t Impact Your Credit Score if You Pay It

When a debt goes into collections, it has most likely already negatively impacted your credit score. When you refuse to work with a collector, it can cause further damage. It’s best to pay your bills on time and avoid collections altogether, but if you are contacted by a collector, just cooperate and pay or explain your situation. It’s a collector’s job to resolve debt, so they are most likely willing to work with you and figure out some options for how you can pay the debt.

If You Avoid Collectors They Will Go Away

Avoiding collection calls will only make the situation worse and damage your credit score. Plus, collectors can help by giving you options to repay your debt. It’s best to cooperate with collectors and try to explain your situation.

The Fair Debt Collection Practices Act Protects All Debtors

According to Investopedia, the Fair Debt Collection Practices Act (FDCPA) is “a federal law that limits the behavior and actions of third-party debt collectors who are attempting to collect debts on behalf of another person or entity.” In short, the FPCPA protects debtors from abusive, unfair or deceptive debt collectors. However, the FDCPA only protects consumer debtors, not commercial debtors. Although there are currently no federal laws controlling commercial debt collection, most states have statutes which govern commercial debt collection.

Smaller Debts Do Not Go Into Collections

While some agencies don’t bother with smaller amounts, others specialize in collecting smaller amounts of debt because it can add up over time to create good revenue. There’s no way to tell if a debt will go into collections or not. Basically, anything can go into collections and harm your credit score. It’s best to just pay what you owe.

Debt Collectors Only Care About Getting Your Money

Debt collectors’ jobs are to resolve debt, not just collect it.They will work with you on payment plans, recommend programs to get out of debt. So, if you’re contacted by a debt collector, see what your options are and what they can do to help.

Hiring a Collection Agency is Expensive

Most collection agencies operate on a contingency-fee basis, meaning if they don’t collect, you don’t pay. Others will charge a flat fee. When you hire a collection agency you are hiring experts who can increase their sales by collecting more money for their customers.

Businesses that Use Collection Agencies Lose Customers

If you choose a good collection agency, you won’t lose customers. This would only be the case if the agency uses illegal tactics to collect debt, like threats or harassment

Contact The Cash Flow Group for any questions you may have about collections!  We are here to help.

 

Florida Debt Collectors and Tax Write-Offs

Monday, September 17th, 2018 | Florida commercial collection agency, Florida Debt Collection, The Cash Flow Group | No Comments

Collecting Uncollectible Debts and Tax Write-offs

Florida Debt Collectors, The Cash Flow Group is here to answer your questions!  One question that business owners often have to wrestle with at tax time is whether or not to write off a debt as “uncollectible.”

If your business uses a cash basis accounting system, this isn’t an issue for you. In a cash basis accounting system, you don’t count money that you’re owed until it’s paid to you. You can still write off any expenses related to an unpaid invoice, but you do not owe taxes on any unpaid income. If you are a large company this also is unlikely to be an issue for you. Large companies tend to use a reserve form of accounting and have a “bad debt reserve” to which they apply bad debts.

However, if you are neither a very large or very small company, you most likely file your taxes on an accrual basis. In accrual basis accounting, the unpaid invoice shows up as income on which you owe taxes. However, if you never collect that money, you can write off the amount as a bad debt expense.

Tax Planning

It is usually best to take your write off as soon as possible so that you get the tax deduction now, instead of later. The only time taking the deduction later would be better is if you are expecting to be in a higher tax bracket later on. This is primarily a concern for sole proprietors and S corporations, whose annual income fluctuates more widely. However, even if you expect to change tax brackets, you can not randomly decide when to write off debts. There are no hard and fast tax rules about when you can consider a debt “uncollectible,” but the IRS does like to see consistency in your tax filing methods.

Generally, it’s hard to justify classifying a debt as “uncollectible” if the debt has been owed for less than 90 days. But, some warning signs that a debt may be uncollectible, even if it’s been less than 90 days, include a company declaring bankruptcy, a company refusing to answer communication, a company stating that they will not pay you, or a company simply disappearing. Once you have turned a debt over to a collection agency, you are also justified in writing it off on your taxes. However, if the collection agency is able to collect, you will owe taxes on the amount collected.

We recommend that you not wait until tax season to think about how you will collect on unpaid invoices. We advise clients to consider professional help with unpaid invoices that are 90 days or more overdue, or when they start to notice any of the warning signs that a business may not be willing or able to pay its bills.

Debt Collecting

Writing off bad debt is helpful to your bottom line, but what’s more helpful is actually collecting on that debt. For example, imagine that your company is in the 33% tax bracket and a company owes you $10,000. If you write that off as bad debt, you’ll save $3,300 in taxes. However, if you hire a reputable collection agency that charges 20% of the amount collected, you could get $8,000. Earning $8,000 is clearly better than saving $3,300.

At The Cash Flow Group, our goal is to make sure you are paid the money you are owed, so that you write off as few uncollectible debts as possible. Please reach out and let us know how we can help.

How long can a company try to collect a debt?

Wednesday, August 15th, 2018 | Florida Debt Collection | No Comments

Does Your Old Debt Have an Expiration Date?

If you have some negative debt reflected on your credit reports, you may be wondering how long debt collectors can try to collect on that debt, and how long that debt can affect your credit. The simple answer is, it depends. The full answer requires some explanation…let’s start with collections.

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Florida Debt Collection Laws

Sunday, August 12th, 2018 | Florida Debt Collection | No Comments

With a combination of both Florida and federal law, collections agencies have a code of conduct that they must follow in order to do their work legally. In the sections below, legal considerations about some of the most concerning aspects of debt collections are outlined, specifically for residents in the state of Florida.

Statutes of Limitations: A statute of limitations on a debt is defined as the period of time following the last payment made on an account, during which a creditor can successfully sue for payment. Once the statute of limitations has expired, however, the debtor has an absolute defense in the case of a lawsuit. In other words, you no longer have to pay.

The statute of limitations in Florida is five years for written agreements and four years for oral agreements. It is important to realize that statutes of limitation on debts do not affect how long they may be listed on your credit report – generally for seven years.

Contact from Collectors: Collectors obtain “bad” debts from original creditors, either by being assigned to them or (usually) by buying them. Your creditor is not obligated to inform you if your account is transferred to a collections agency, so sometimes the first clue that you get is a most unexpected phone call or letter.

When you are contacted by a collections agency for the first time, they are required to send you a written notice in the mail within five days. The notice must include three important pieces of information: (1) the total amount of money that you owe, (2) the name of your original creditor, and (3) the actions that you should take if you wish to dispute the debt.

Collectors may contact you about your debt by phone, mail, fax, or telegram, both at your home and at work. If there is a specific type of contact that you would like stopped or altered, then you should state your wishes in writing and send them to the collections agency via mail.

For example, if your employer disapproves of calls to you at work, then you should tell them this and that you would like such calls to stop. If the hours during which collectors are allowed to call without approval (8am-9pm) are inconvenient for you, then you should tell them to call another time.

If you have representation by an attorney, then collectors should contact your attorney instead of you directly once you have told them this.
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Disputing the Debt: If a collector contacts you to demand payment on a debt that you believe to have been paid or that you do not recognize, then you must dispute the debt with 30 days of initial contact with the collections agency.

No matter what message you want to get across to a debt collections company, you should do it in writing. Particularly, with very important correspondence such a dispute, you should send your mail certified and with a delivery receipt. Such documentation is essential, especially if there is a difference in opinion on your liability for the debt.

Do not send original documents to collectors, but do send copies of documents that support your position. Once you make your dispute in this way, then the collections agency may not contact you again without providing its own proof of the debt. In the event that the debt you are being contacted about is someone else’s, they may ask for proof of your identity.

If you file a dispute on your debt, then the collections agency must report this dispute to the consumer credit agencies if they choose to report your debt. It’s either all or nothing when it comes to reporting.

What Collectors Must Do: Debt collectors who contact individuals in Florida must be registered with the state, including those debt collectors who are based elsewhere. They must be completely honest with you about their identity and their purpose. Any collector who calls you must tell you their name and the name of the collections agency upon your request.

Collectors must also protect your privacy, according to state and/or federal law, in the following ways:

• They cannot disclose any information about your debt that potentially could harm your reputation to anyone outside of your family.
• Publishing or contributing to any type of “deadbeat list” or “black list” is illegal.
• Mail sent by the collections agency cannot contain any immediately visible information that could embarrass the debtor or reveal the debtor’s situation.
• Collectors cannot reveal any information about your financial situation or their collections efforts to your employer without first obtaining a court order (such as for wage garnishment).
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What Collectors Must Not Do: In addition to their responsibilities as outlined above, debt collectors also are obligated to refrain from any type of harassment, abuse, or deliberate misleading of debtors.

The following types of harassment / abuse are illegal:
Use of obscene or profane language.
Calling a debtor or his or her family repeatedly with the intent to annoy or irritate.
Threats of violence against a debtor or his or her property.
Threats to advertise one’s debt.
Threats to take any action that is illegal, or that the collector does not really intend to take.
The following methods of misrepresentation are illegal:
Leading a debtor to believe that the collector is an attorney, a law enforcement official, from a government agency, from a credit bureau, or approved by the government.
Using stationary or forms that are made to look like legal documents or official government documents.
Implying that the debtor has committed a crime or is going to jail.
Attempting to collect a debt that is known to be incorrect.
Hiding one’s identity so that a debtor is fooled into paying for a collect call or telegram.
Violations of the Law: If you believe that a collector has broken in law while trying to collect on your debt, then you should contact the state attorney general. You also may want to file a complaint with the Federal Trade Commission, the agency charged with overseeing the federal Fair Debt Collection Practices Act. If a collections agency has broken the law in your case, then you might successfully file a lawsuit against them.

 

The Cash Flow Group

Fort Lauderdale / Miami, FL

Toll Free: 800.226.2006

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The Cash Flow Group, Inc

3389 Sheridan Street

Suite 135

Hollywood, FL 33021

Email: info@thecashflowgroup.com

800.226.2006 Toll Free

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