Starting a Collection Agency

[TIM_S_JR]

I was pitched the idea today to start a collection agency and decided to look into it. I don't know what is need legally to get going and would like some input on what i have to do. Are there any laws regarding this type of business in nebraska or in the U.S.A. for that matter. Let me know

*I have not looked into this too much so please give me whatever you can.

[Privateer]

Are you planning to purchase the debt you are intending to collect, or collect debt on commission for other companies? The laws are different in each case.

[HENARRY JAYA]

Depends on what form you organize the business under, but if you have employees in it, you'll have to pay payroll taxes (Federal, State), and you'll either have corporate taxes to pay if the business runs a profit, or the income from the business will flow through to you and you will have to pay taxes on (both regular tax, and possibly self-employment tax).

[Will]

Usually a debt collection agency will be formed by people who are already established lawyers etc, as they know the game well and can bring their skills into the process.

It is not in any way an easy or simple business, so I would suggest this is a startup that might be left to those with experience in banking/lending or law.

[Proph]

also in order to collect debt a person must pass the FDCPA, last time i checked it was about $2500 a person. once you have your FDCPA you are good go but one of the first things you need to do is hire someone to make sure you stay in compliance. due to the fair debt collection rules there are strict (and sometimes very gray) things you can and can not do/say. You may not think so but collections is actually pretty complicated, for example there are many different kinds of debt, such as first parties, charge offs, etc... then to collect debt some states require different registrations, minnesota is that way and few others.

This is going to sound a little odd but, if you want to truely go down this road i highly suggest you get a job as a debt collector. it isn't hard to get these jobs but people don't stay very long(it sucks). Work it for 6 months and you will have a very good understanding of what it is you need to do to venture out on your own. your first 3 employees though would be a lawyer, one collector, and sales person. only the collector comes cheap.