Swimming With Sharks: How Abusive Debt Collection Practices Affect American Small BusinessesFinance, News June 20, 2012
Credit makes the world go round – this is very true as far as small business is concerned. Knowing how to handle credit -other people’s money- is something we all have to deal with at one point. Entrepreneurs for the most part will often need a line of credit in order to grow effectively. The recent economic downturn, while having officially ended in 2009, still continues to affect the American economy. A lot of entrepreneurs in microbusinesses are still saddled with debt.
A recent Gallup Poll showed that about 36% of US small business owners are not comfortable with their debt levels. In the same poll, 1/5 find it impossible to get all the credit they need. It’s no surprise that debt collection has become a growth industry in itself. While that in itself isn’t a bad thing,
The following infographic from FrugalDad.com explains how American debt collection might be out of control:
There’s always two sides to the story, but one thing is clear- entrepreneurs who fail to pay their debts on time have been harassed by private debt collectors working on behalf of some very big names- including the IRS, which had recently ended their private debt collection program. Debt collectors have had more complaints filed against them to the Federal Trade Commission than any other industry,with 181,000 cases in 2011.
In a bizarre twist, phantom debt collectors have been harassing Americans from overseas, using illegally-obtained call lists. These debt collectors will often be abusive- even if there was never any debt to begin with.
Paying off your debts on time is of course, a no-brainer. It would be unrealistic to expect small business owners to not seek lines of credit or to take risks. But knowing just how much of a risk something might be is something you owe to yourself to figure out.