Any business owner or manager who has ever made a collections call has done first party collections, whether they realize it or not. First party collections means collecting on your own accounts, so any request for payment by phone, letter or in person qualifies as first party collections.

You’re considered the “first party” because you were involved in the original transaction, while the debtor is known as the “second party.” A “third party” doesn’t enter into it unless you hire a separate debt collection agency.

First party collections are most common early in the debt collection cycle. As soon as your regular accounts receivable staff become aware that a bill is past due, they can pass it on to first party collections without a time lag. First party collections people are often more cognizant of the need to attempt to keep on good terms with the debtor in order to get more potential business in the future.

First party collections attempts are often seen as friendlier or more understanding than activity from third party collections agencies. Your client may rely on your service or product for his business to run, and if so he will be just as amenable to staying on good terms as you are.

Another difference is that unlike third party agencies, first party collections do not fall under the Fair Debt Collection Practices Act. When you are the original party or a legal affiliate of it like a subsidiary, you are considered a lender rather than a collector. Third party agencies therefore do not have as much wiggle room in their practices as first party collections entities due, but the latter are still subject to state and federal law.

Most companies handle their own collections for a period of ninety days to six months. Ideally, when the 2-3 month mark comes up and collections efforts aren’t working, it’s common practice for companies to turn over these accounts to a third party agency or “sell” the debt to them, which means the agency pays for the right to keep whatever return they get on the debt.

In addition, first party collections aren’t very effective unless you have a specialized collections staff. Your sales force, accounting staff or management are not trained collections people and their time is better spent elsewhere while you save collections endeavors for people who know how to perform them.

If you hire an individual or create a department to handle first party collections, however, they can be just as successful as third party collections. If they are knowledgeable in modern collection techniques like private investigation to track down new addresses and phone numbers, offering incentives to get the debtor to call in or working out settlements, first party efforts can be remarkably efficient. When trying to make the decision of which type of collections instruments to use, keep in mind whether you’re spreading your resources too thin or if you have the team in place to do first party collections.

The FTC are to host a round-table to discuss debt collection and arbitration practices Aug. 5 and 6 at the Thorne Auditorium, Northwestern School of Law, in Chicago.

The round-table follows up on the FTCs February 2009 report Collecting Consumer Debts: The Challenges of Change ” A Workshop Report, which advised that the debt collection regulatory system in the U.S. should be altered and remodeled. The report also released a series of regional round-tables to further discuss debt collection litigation and arbitration, next weeks meeting being the first.

The round-table will involve representatives from the collection industry, government officials, judicial system representatives, consumer advocates, academicians and other stakeholders.

On the first day, the round-table will cover litigation topics including service of process, consumer default rates, time-barred debts, evidentiary prerequisites, and trials in collection actions and post-judgment matters.The second day will cover arbitration topics including the role of consumer choice, consumer arbitration codes and behavior in certain situation, perceptions of bias, transparency of results and post-decision issues.

Too many consumer attorneys contest collections not on the principle of whether the consumer legally owes the debt, but on very small technical issues, according to Markoff. The FTC doesn’t regulate attorneys. Among the issues ACA International hopes to bring up at the Chicago round-table is the education of consumers regarding statute of limitations for collections, process servers and proper notice for consumers on arbitration issues. NAF agreed to immediately stop accepting cases involving consumer credit.

New Yorks attorney general also announced the filing of a lawsuit against 37 law firms that could potentially overturn 100,000 consumer credit judgments against consumers in the state. The suit also targets two collection lawsuit process servers. In addition to the FTC, NARCA and ACA, others on the round-table will include representatives from Public Justice, the Consumers Union, the Michigan Poverty Law Program, the Michigan Creditors Bar Association, the University of Kansas School of Law, Public Citizen, the Center for Responsible Lending, the Illinois Credit Bar Association, the American Arbitration Association, the AARP Foundation, the National Arbitration Forum and DBA International.

The Federal Trade Commission will host a round-table to discuss debt collection and arbitration practices Aug. 5 and 6 at the Thorne Auditorium, Northwestern School of Law, in Chicago.

The round-table follows up on the FTCs February 2009 report Collecting Consumer Debts: The Challenges of Change ” A Workshop Report, which favored that the debt collection regulatory system in the U.S. should be changed and renewed. The report also publicized a series of regional round-tables to further discuss debt collection litigation and arbitration, next weeks meeting being the first.

The round-table will involve representatives from the collection industry, government officials, judicial system representatives, consumer advocates, academicians and other stakeholders.

On the first day, the round-table will cover litigation topics including service of process, consumer default rates, time-barred debts, evidentiary qualifications, and stresses in collection actions and post-judgment concerns.The second day will cover arbitration topics including the role of consumer choice, consumer arbitration codes and rules of conduct, perceptions of bias, transparency of results and post-decision issues.

Too many consumer attorneys clash collections not on the evidence of whether the consumer legally owes the debt, but on minuscular technical issues, according to Markoff. The FTC doesn’t regulate attorneys. Among the issues ACA International hopes to bring up at the Chicago round-table is the education of consumers regarding statute of limitations for collections, process servers and proper notice for consumers on arbitration issues. NAF agreed to immediately stop accepting cases involving consumer credit.

New Yorks attorney general also announced the filing of a lawsuit against 37 law firms that could potentially overturn 100,000 consumer credit judgments against consumers in the state. The suit also targets two collection lawsuit process servers. In addition to the FTC, NARCA and ACA, others on the round-table will include representatives from Public Justice, the Consumers Union, the Michigan Poverty Law Program, the Michigan Creditors Bar Association, the University of Kansas School of Law, Public Citizen, the Center for Responsible Lending, the Illinois Credit Bar Association, the American Arbitration Association, the AARP Foundation, the National Arbitration Forum and DBA International.

If you’re a business owner or departmental manager who does any kind of collections activities, you’re already pursuing first party collections, though you may not have known it. First party collections means precisely that: attempting to collect on debt for your own company instead of sending your accounts to a third party agency. Any time you make a call asking to remit payment or send a past due notice you’re engaging in the practice of first party collections.

The name “first party collections” means that the entity collecting (or an affiliate was a party to the original transaction. The debtor is referred to as “second party,” and “third party” means another entity that gets involved in the attempts at collection, like a debt collection agency.

Third party collections are different from first party collections in a few ways. For one thing, there’s a lag in time from when a bill becomes past due to when a third party collector starts collecting, simply due to the exchange of files. Another difference is that third party collectors don’t have a personal relationship with the debtors, so they may not be cognizant of the need to remain on pleasant terms with them in the hopes of getting future business.

Often the debtor will be more inclined to try to please their original creditor, especially if you have a product or service that he or she needs in order to maintain their business. Sometimes a gentle reminder that you won’t ship any more items until their past due amount is cleared up is enough to get recalcitrant debtors to pay.

In addition, first party collections are not governed by the Fair Debt Collection act, believe it or not. This is because under the law the first party or its subsidiary is considered the lender rather than a collector and it means you can do some things that a third party debt collector can’t by law. There are still state and federal laws that apply, though, so make sure you are familiar with all applicable regulations if you go this route.

The rule of thumb for first party collections no matter what the industry is to keep trying to collect for 2-3 months. When you reach that milestone and haven’t yet collected, it’s typically a good idea to engage an outside agency or sell the debt, which means someone pays you up front for the right to collect on the debts.

The most successful first party collections are done by dedicated collections professionals. Salespeople, accounting staff and business owners just aren’t as capable at collections because their attentions are scattered and collections is one of the least pleasant tasks they have to do.

If you hire an individual or create a department to handle first party collections, however, they can be just as successful as third party collections. If they are knowledgeable in modern collection techniques like private investigation to track down new addresses and phone numbers, offering incentives to get the debtor to call in or working out settlements, first party efforts can be remarkably efficient. When trying to make the decision of which type of collections instruments to use, keep in mind whether you’re spreading your resources too thin or if you have the team in place to do first party collections.

Whether you do your own debt collection or hire it out to a third party collection agency or collections consultant, at some point collections issues will affect your business. If you know the steps in debt collection you can handle it quickly and efficiently regardless of whether you do it yourself or farm it out.

First, keep in mind that debt collection should cost you no money up front. Some agencies will buy your debt from you, meaning they pay you a percentage of the money owed and in return you give them the right to collect and keep whatever they can get. Another option is to allow them to keep a percentage of whatever money they recover. Either way, you don’t need to pay anything up front so using a collection agency is often a wise decision because they are more skilled at getting a higher percentage of your money back.

Debt collectors work with certain proven tools. You may think you’re collecting debt by sending copies of your invoice but collections letters need to inform the debtor that they have 30 days to respond if they wish to dispute the facts. It’s often a good idea to send repeated copies of this type of letter so it can be a little bit time consuming. In addition, if the debtor does dispute the debt, you’ll have to know how to prove your version of the facts. Debt collection professionals handle this type of problem every day.

The next thing you need to do in debt collection is reporting unpaid bills to the credit bureaus. This often causes consumers to pay on past due accounts because they want to keep a decent credit score.

However, some consumers won’t pay, in which case you still need to actually report the debt to the credit bureaus. This is a very time-consuming process because it often results in a back-and-forth. You report the debt, the consumer disputes it, you have to back up your accusation and the consumer gets another chance to respond. Sometimes the consumer will contact you asking to work something out where in return for payment, you agree to let their credit report be expunged. This is illegal in some places so using a collection agency that is well aware of legal requirements can save a lot of problems down the road.

Finding the debtor when he or she is trying to hide can be very intimidating and often is enough to get him or her to pay up on what they owe you. Most debtors try to avoid calls from debt collectors, and when they realize this strategy won’t work they start to become amenable to resolving the problem.

The final stage in debt collection is when you or your collection agency work out an agreement with the debtor. Professional collections people start out by asking for full remittance but since most people who have delinquent accounts are experiencing financial difficulties, it may be preferable to get them to pay a percentage of the debt owed immediately, or work out a repayment plan.

There’s a lot to be said for getting a partial settlement right away, because the more time goes on the less likely it is that you will recover the debt. However, if you work out a payment plan you’ll also make more money on interest over time, so this is a perfectly legitimate resolution to debt collection problems as well. Either way, using debt collection techniques that debt collectors use will help you get more of your money back.

At a press conference Tuesday in Buffalo, N.Y., New York Attorney General Andrew Cuomo declared that his office has shut down a debt collection operation in Western New York that included at least 9 collection agencies owned by Tobias Boyland.

Cuomo said that his office executed search warrants on four of Boylands businesses and his residence early Tuesday morning. When investigators executed the warrant at Boylands home, they found a loaded gun, prompting the Erie County Sheriff to take him into custody. Boyland is a convicted felon and may face additional weapons charges in Erie County.

Boylands operation was featured heavily in a Dateline NBC segment that was broad-casted in March. Cuomo remarked that a Dateline crew was present at one of the offices raided Tuesday. The attorney generals office alleged that Boylands operation annoyed and browbeat consumers into paying old debts by threatening jail time, posing as police officers and worse. According to Mitra Hormozi, special deputy chief of staff to the attorney general, These are some of the worst tactics we’ve seen.

“Plain and simple, this company was run by people who lied, bullied and preyed on vulnerable Americans struggling to resolve their financial situation,” said Cuomo in a statement. “Pretending to be a police officer, threatening to throw consumers in jail – these practices are as despicable as they are illegal. My Office will continue to relentlessly root out these kinds of tactics and shut down unscrupulous companies that violate the rights of consumers across New York and the entire nation.”

Cuomo said that Boylands debt collection operations in the Buffalo area had been shut down, including offices running under the names Central Resource Management, Final Claims Asset Locator’s, Final Control Asset Locator’s, Interchange Payment Solutions, Next Step Services, Portfolio Asset Assurance, Silverbay Services, and Teleport. As well as 3 others, ” 2 with criminal records ” associated to Boyland were named in the suit.

The office of the attorney general announced in May that it had shut down two collection agencies and subpoenaed 20 others in what they called a statewide inquiry into debt collection companies. Less than a week later, the office said that it had settled with three more collection agencies under investigation.

In June, Cuomo announced that his office will keep on investigating the countless deceptive practices that debt collection companies, debt settlement companies and others make use of as a means to exploit consumers who are already down on their luck.