Contacted by Rsg Collect? 7 Steps Before You Agree to Anything

When a company calling themselves RSG Collect rings up about a merchant cash advance, don’t agree to anything over the phone. Figure out who’s behind the call and what they want. Read the terms of your original agreement. Ask for a reconciliation in writing and keep careful records. Bring any agreement to competent counsel to review.

1. Find out who’s calling

RSG stands for Recovery Solutions Group. Just type the firm’s name into your search engine, as some variation of the firm’s official name should turn up. Then study the company’s own website closely. Recovery Solutions Group’s site says it has an attorney network, which suggests it may sue. In 2019, a Connecticut consent order against it claimed that the firm collected consumer debts in the state without a state license for that, from June 2014 to November 2017.

2. Know which rules apply

Most of the protections people think they have do not apply to business accounts. You may know that the main law protecting your rights in a debt collection is the Fair Debt Collection Practices Act, known as the FDCPA. But the FDCPA applies to consumer debts - debts “primarily for personal, family or household purposes.” It does not apply to collection of business debts.

On a consumer debt, a collector must send you a validation notice within five days of first contacting you and give you 30 days to dispute. But that rule doesn’t apply here, for a business debt. To know what applies, you need to read the original contract.

3. Pull out your agreement

Now, check your cash advance agreement, the original document. Funders collect a percentage, but they guess what you will take in weekly, and withdrawals are based on estimates. See if it lays out how and when you can get a reconciliation to confirm the balance. Many agreements do allow that. A “reconciliation” asks the funder to go back to your actual receivables and adjust payments to the agreed percentage. The clauses vary in details: timing, when to request, how to notice, what documents to submit. Read the terms and act according to them.

Also check whether the agreement includes a personal guaranty that makes you individually liable for the debt, even though you did business through a limited liability company. That little bit of fine print can undo all the limited liability your LLC or corporation was supposed to offer. Look for a confession of judgment clause. On August 30, 2019, New York barred filing confessions of judgment against out-of-state debtors.

4. Put the reconciliation request in writing

Don’t rely on your phone calls. The lender may or may not see those calls as a dispute or even a reconciliation request. That is why following your agreement’s procedure is key. Tell them you are asking for a reconciliation of payments. It may not be enough to just ask for help. Write the words “formal request for reconciliation.”

In the same letter, tell them you are not refusing to pay but asking to adjust the withdrawals. Tell them your income dropped and payments don’t reflect the percentage they are due. You may also ask for a payment pause, to recover from a slump. Attach your bank statement, merchant processing statements and business sales reports.

5. Protect the record

Send your reconciliation request by every email or portal stated in your agreement. Ask that they confirm receipt. Always keep a copy, with the time and date, of every record you send. Keep the same records on any phone calls: note when you called, whom you spoke with, and what you asked for. Follow up. Keep after the lender until they reply in writing. If they tell you the request is incomplete, do not argue about it on the phone. Ask them in writing what you’re missing. Get a list and follow it.

A documented request to reconcile may matter later if the company declares a default or sues you on a default. It may help show you were not refusing to pay, and that you are trying to comply with the agreement. Of course, it is no guarantee. An actual refusal to give you a reconciliation may lend weight to a counterclaim or defense. The earlier you make the request, the better. So act now.

6. Agree to nothing by phone

Accept no change over the phone. No matter how good it sounds, hold out for a written agreement. Bring it to a lawyer you trust to review before signing. The same goes for any confession of judgment, guaranty, settlement or payment plan.

7. Count the tax cost of a settlement

A debt settlement is usually going to cost you on your taxes, by increasing your taxable income. The Internal Revenue Service generally treats canceled debt as taxable income. Debts a court cancels in bankruptcy are an exception. Others may be, too - for example, debts canceled because the debtor is insolvent. The creditor may even have to file a 1099-C for $600 or more of canceled debt. The creditor must be one of certain types of institution to have to file a 1099-C. Ask a tax adviser before you settle to find out how a canceled debt will affect you.

Keep in mind that reconciliation is meant to take place before a default, not as a litigation argument after one. Every case turns on what the contract says, what you did and how the lender responded.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.