Starting off with a debt collection franchise business – is it a good idea in this economy?

As the US economy is going through a sluggish state, an increasingly large number of consumers are defaulting on their multiple credit cards. With a close-to-double-digit unemployment rate, there is too less cash in the hands of most consumers with which they can repay their high interest debts. This makes creditors transfer your accounts to the collection agencies and in return you get harassing calls from the debt collection agents in order to repay the money. When such debt collection agencies are growing in popularity, wouldn’t it be a good idea to start off with a debt collection business of your own? Well, certainly it would be. Now if you want to set up a debt collection business of your own, you must be wondering about the ways in which you can set them up. Here’s help for you.

1. Decide the name of the company: The very first thing that you need to do is to decide the name of the company so that you may immediately take out a business certificate from the government office. This particular certificate is usually needed while hiring your employees, starting a bank account and for accepting payments on your company’s name. As you may be aware of the fact that debt collection agencies process a number of payments, you may be eager to have a name and a bank account that will get you started immediately.

2. Know about the licensing requirements: Before opening a debt collection franchise business of your own, it is important for you to understand the licensing requirements that you may need to satisfy. Some municipalities and states require to be licensed before you even start off with your business organization.

3. Establish a merchant bank account: As you’ll require accepting credit card payments from the debtors in question, you must immediately take steps to establish a merchant account with your bank. The collection customers may want to use a wide variety of payment methods and your business organization must be well-equipped so that you don’t let them go away.

4. Find a good location: The next thing that you need to do is to find out a good location for your business so that all creditors and debtors can easily reach out to you. Always make sure that you set up your business far away from your home to avoid any kind of future discrepancies. There are various debtors and consumers who will not resent to what you’re doing as this often becomes harassing for the debtors. This may lead to scuffles in the future. Make sure you choose a place away from your home.

5. Begin widening your network: You must immediately begin contacting the local banks and the credit offering institutions so that you can easily start getting clients. You may use an introduction letter and then call the client for further meetings. This will broaden your network and thereby give you chance to make profits.

Will you be successful? Can anyone advice me who has done this before? Where will you get your financing costs? These are some important questions that you must ask yourself when you think of setting up collection agencies of your own. Take the needed steps and work within the clauses of the FDCPA (Fair Debt Collection Practices Act) to maintain your goodwill.