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19 Preventive L. Rep. 4 (2000-2001)
How to Write a Collection Letter for a Business Client without Becoming a Defendant Yourself

handle is hein.journals/prevlr19 and id is 36 raw text is: DEBT COLLECTION: HOW TO WRITE A COLLECTION LETTER FOR A BUSINESS CLIENT WITHOUT BECOMING A DEFENDANT YOURSELF By Sumner A. Bourne* In maintaining good relations with a business client, it is not unusual for a general business advice attorney to confront the following situation. On an idle Tuesday afternoon the attorney receives a call from the client's presi- dent regarding some work the attorney has been doing, and toward the end of the conversation the client makes the following seemingly innocuous request: We had a customer bounce a large check made out to us, and he hasn't been returning our calls. Would you write a letter to him on your letterhead? I think that would do the trick. The attorney agrees thinking that this simple request will take little time and build client goodwill, even though neither he nor his firm does much collection work. How much trouble can I possibly get into writing one collection letter, he further thinks to himself. In reality, such a letter can cause much trouble and, as this article will discuss, must be drafted with extreme caution. The Fair Debt Collection Practices Act and Attorney Coverage In an attempt to curb abusive prac- tices by third party debt collection agencies toward consumers in the col- lection of consumer debts, Congress passed the Fair Debt Collection Practices Act (FDCPA) in 1977.' The FDCPA contains civil penalties against a debt collector for non-compliance, including actual damages, statutory damages of up to $1,000 per violation and most significantly, an automatic award of attorney fees to a successful plaintiff.2 Originally, the FDCPA con- tained an exclusion from coverage for attorneys.3 However, following what was perceived to be an abuse of this exception by attorneys who began operating collection agencies, Congress repealed the attorney exception in 1986.' Since then, Congress and the courts have continued to broaden the category of attorneys covered and the conduct regulated under the FDCPA. The Supreme Court added its interpre- tation of the FDCPA coverage of attor- neys in the 1995 decision Heintz v. Jenkins.5 In Heintz, the Court held that an attorney is considered a debt col- lector, and therefore subject to FDCPA regulation and penalties, if the attorney regularly attempts to collect debts, either directly or indirectly, including through the use of litigation.6 Unfortunately, the language of the FDCPA itself and the Heintz opinion gave little further guidance on what regular debt collection practice actual- ly means. Consequently, the answer to the important ques- tion of whether or not our hypothetical gen- eral business practi- le FD tioner is required to follow the FDCPA eded requirements and restrictions is elusive. qulrc A review of the court opinions that have considered the he CO1 question of which attorneys classify as e IBntla debt collectors leads to the conclusion that catiOll any attorney who writes a collection let- li ter should assume that his conduct is regulat- ed under the FDCPA.t The courts have inter- preted the term regu- t any lar to mean even occasional collection n obtb practice, even if it is a very small amount of emSed the attorney's or firm's work volume. For purl example, in the often- cited case Stojanovsky v. Strobl & Manoogian the court held that an attorney was a debt collector subject to FDCPA regu- lation even though collection work only constituted 4% of his total practice.' Additionally, some areas of law not tra- ditionally thought of as pure collection law, such as forcible entry and detainer actions, are considered by most courts to be collection activities that can raise a lawyer's or law firm's collection prac- tice percentage.' It is also the author's opinion, as discussed infra, that a recent amendment to the FDCPA essen- tially requires that an attorney writing a collection letter affirmatively state that he is a debt collector. It is important to note that the FDCPA covers only consumer debts, and only consumers are protected under the FDCPA.0 Some oi*, non-traditional edebtor/creditor trans in 19 actions are considered consumer debts under 3 th a& the FDCPA, such as insufficient fund ftor i checks and rental obligations, if the Osume underlying debt is consumer in nature. CO The FDCPA does not thaf regulate business-to- ebusiness debts, and only real persons ationo qualify as potential plaintiffs under the Pt tostatute, not corpora- -bt, antions or partnerships. If the type of inform debt falls tinder FDCPA coverage, and ined the attorney falls with- sin the debt collector definition, then the tattorney must obey a number of prohibi- tions in attempting to collect the debt that require certain disclo- sures in any communication. A brief summary of those prohibitions and dis- closures follows, and any attorney that 4 * PREVENTIVE LAW REPORTER * PREVENTIVE LAW REPORTER * PREVENTIVE LAW REPORTER * PREVENTIVE LAW REPORTER * PREVENTIVE LAW REPORTER * PREVENTIVE LAW REPORTER .

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