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Small Debt Collection in Massachusetts
Small Debt Collection in Massachusetts
Small debts are often ignored by those who owe them as they believe the company they owe will not pursue legal action if the amount owed is not significant. However, if you own a business, ignoring even small debts can have a negative impact on the financial health of your business. Massachusetts debt collection laws are specific regarding how you can go about collecting debts, even small ones. If you don’t follow those laws or approach debt collection in the wrong manner, it could result in you not being able to collect the debt in the future.
Limits on Debtor Contact
If someone owes you money in Massachusetts, you cannot communicate that information to anyone but the person who owes you, including employers and family members. You also cannot send threatening letters or use offensive language when trying to collect the debt. Debtors cannot be arrested for not paying and you cannot pretend to be part of the judicial system in order to force them to pay. You also may not call them before 8 AM or after 9 PM. In Massachusetts, it is even illegal to ask for a post-dated check.
What Is Covered Under the Law
In Massachusetts, any debts incurred for personal, household or family purposes are covered under the debt collection law. If you are owed unpaid rent, auto loans or condo fees, they are not covered by the debt collection law. There is also a six-year statute of limitations. Once the person makes the last payment, the statute of limitations clock begins. If six years pass after the last payment, you may not initiate any more collection efforts.
You are required to send a written notice which includes how much they owe, their name and a statement the debt will be valid if a dispute is not filed within 30 days. You must also notify them that if they dispute it within 30 days, you will send verification. You do not need to send the notice prior to filing in small claims court but if you do, you must wait to see if the debtor disputes the claim before filing.
Locating a Debtor
Often, debtors stop responding when they know they owe you money. If they move or change jobs, that makes it difficult to find them to collect. The law in Massachusetts makes it difficult to get information on where a debtor may be and if you violate the laws, you could be barred from collecting anything. For this reason, hiring a collection attorney, even for small debts, might be your best option to get the money you are owed.
If you are owed a small debt, you may think that a Boston debt collection lawyer may cost more than the debt itself. However, the personalized attention you will get from a collections attorney is well worth the cost in many cases. A collection lawyer can explain the proper procedures you should take and craft a debt collection letter that meets all the requirements of the law. In some cases, a letter from an attorney is enough to get a debtor to pay a debt, especially if it is a small amount of money. If you should need to take the person to court, the attorney can help you file the paperwork yourself or handle the case for you, although that may be cost-prohibitive for a small amount of money. One option is to keep a collection attorney on retainer that would allow them to handle both large and small debt issues for you, bringing the overall cost down and help you get the money you deserve.
Debt Collection Company
You also have the option of hiring a debt collection company rather than an attorney. However, it is highly recommended that you talk to an attorney about money that is owed to you. It is true that collection agencies have lower costs than attorneys but there are also many who do not abide by fair debt collection laws. You will want to research such companies very well to be sure their collection tactics are in line with your company’s beliefs. It is also important to remember that many debtors will ignore correspondence from collection agencies while they are less likely to do so if the correspondence comes from an attorney.
Small Claims Court Limits
One option you have is to file a claim in small claims court if the debt is small. You are able to have an attorney represent you but if you want to file yourself, an attorney can help you with the forms and explain what will happen during the process. Most small claims courts have limits, often less than $5,000, and their fees are usually low. If you win the case in small claims court, you can ask the judge to order the debtor to pay your court fees as well.
There is no question that talking to an attorney if someone owes you money and is refusing to pay can be beneficial. If you are owed money, even if it seems like a small amount, contact our office today for a no-obligation consultation to determine what rights you may have. We will review your case and determine whether we need to step in or if we can simply advise you on what steps you can take to get the money you are owed.