When it comes to collecting debts from a business in another state or country, it’s important to be aware of the laws in both your own location and the location of the business in question. While it’s always a good idea to understand your potential client’s regional situation, when it comes to debt collection you’ll want to be extra careful. Doing business with partners in other parts of the world isn’t a bad thing, of course, but it can complicate your collections process if you don’t do your research beforehand.
Debt collection laws only vary by cities if the city you’re in and the city your debtor is from cross state or country borders. Typically, collection laws will be consistent across states and countries, but for businesses that work across multiple states or near borders, a significant deal of trade and business can end up happening outside of your own state.
Collections Across States
Typically, commercial debt collection laws are dictated at the state level, rather than the national or federal level. For example, if you live in Texas and you’re doing business with someone who operates out of New Mexico, it would be a good idea to have an understanding of the laws for both states. To better protect your own assets and financial investments, ensure that your in house collections process accounts for these differences.
Another factor to consider is that laws will typically apply to a resident of the state accordingly. In that same example, that means you and your business are bound by Texas laws while your partner’s business is bound by laws in New Mexico. Simply because you do business together doesn’t mean that your state’s laws will apply to their business operations.
Should you end up in need of a commercial debt collections agency, inquire after your specific situation. While a good number of agencies will likely work with any client to collect any debt, some agencies may not have the resources or interest in taking cases that involve multi-state businesses. If a smaller agency practices solely with businesses in East Texas, it may cost them more than it’s worth to send investigators to Washington or Maine based on the amount of potential return. On the flip side, if you live along a border where it’s incredibly common to have interstate business dealings, there may be agencies that are more familiar with the laws and common collection issues for the area.
You’ll also want to invest in an agency that handles things professionally. While you’d never want to work with unscrupulous agencies, the sometimes difficult nature of collecting from a business that operates under different state laws can be complicated further if the agency you work with uses unsavory tactics. Everyone would prefer to get paid on time, but it doesn’t always happen. So when you turn to a collections agency, it’s as much of an investment as the initial business.
Collections Across Countries
International debt collection can be more complicated than collecting debt in different states, as there are more layers and details to consider. Although the United States doesn’t have federal laws in place for commercial debt collection, that is not the case with all countries. If your debtor happens to be located in another country, it’s important that you research the country’s laws. Below are some examples of different international laws:
- Debt collection companies are illegal in China, but there is an exception for lawyers to collect debts.
- There are two different legal systems in Canada: the French-based law in Quebec and the Great Britain-based law that applies to the rest of Canada.
- In Mexico, debt collection legal battles can take up to three years.
- Debt is up for negotiation in Italy so you may or may not receive what you are owed.
- There are three jurisdictions in Australia for debt collection, which are based on the debt amount.
These are just a few examples of how different countries handle commercial debt collection. In addition to working within a country’s defined laws, you also have to consider language barriers and different currency exchange rates for collecting your debt.
Due to the various factors you need to consider when collecting international debt, it’s important that you conduct your own research about the country where your debtor is located. And if you’re working with a collection agency, do your homework on their experience with international debt collection.
Choose the Right Collections Agency
As you can see, there are a lot of components to consider when it comes to collecting debts across different states and countries. This is why it’s crucial to choose the right collections agency with the reputation and experience for dealing with complex commercial debt collection.
With over 60 years of commercial collections experience, Alexander, Miller & Associates provides high quality service and adheres to strict ethical practices. All of our nationwide attorneys are members of the Commercial Law League of America and must follow the organization’s strict standards. Our experienced team is familiar with both state and international laws, and we promise to effectively and efficiently handle your unique case.
Contact us today to discuss your commercial debt collection needs.