All collections can be divided into two types – commercial and consumer.

The lines are often blurred because of the nature of what is being collected, but generally speaking, there are clear differences between commercial and consumer debts.

Whatever your current position is, understanding the differences is important for tackling debt collection effectively.

What are Commercial Collections?

A commercial collection arises from a business-to-business debt.

An excellent example of this would be Charles City Cleaners not being paid by Downtown Dry Cleaners for cleaning suits because Downtown didn’t have enough money in its account to cover the charges. In other words, “out of business.”

What are Consumer Collections?

A consumer collection arises from an individual-to-business arrangement.

For example, Charles City Cleaners is not being paid by John Doe for cleaning his clothes because he didn’t have enough money in his account to cover the charges.

In this case, it falls under consumer protection.

Main Differences Between Commercial and Consumer Collections

So, what really separates commercial and consumer debtors?

The answer to this question depends on who you ask because there is not a clear-cut distinction.

The laws governing uncollected debts vary from state to state and can depend on whether it’s a business or an individual that has failed to pay the debt, the type of debt in question, and the particular regulations.

With that said, generally speaking, there are three main differences between commercial and consumer debtors. These include:

Ability to Pay

Commercial debtors have a much higher likelihood of paying their debts than consumer debtors.

Businesses involved in the industry are always looking for ways to make money, and they understand the cost of not paying their debts can impair or destroy their ability to make money.

Consumer debtors fail to pay their bills because of financial challenges due to unemployment, bankruptcy, age (senior citizens), mental health issues, etc. The odds of a consumer debtor paying a debt are much lower because of these financial challenges.


Commercial accounts have a higher likelihood of being collectible.

Consumers owe money for a variety of reasons, including not having the funds to pay bills resulting from unemployment, medical issues, an increase in living expenses (like rent), etc.

On the other hand, commercial debtors fail to pay their bills because they are out of business or don’t understand the importance of paying their debts.


A commercial debtor is more likely to settle a debt and make payment arrangements than a consumer debtor.

A commercial debtor knows that if it fails to pay its debts, it could be putting its industry at risk and impairing its ability to make money.

A commercial debtor is also more likely to understand the importance of paying its debts.

Consumer debtors are not in business, often have financial challenges, and struggle with meeting their needs financially regularly. Usually, they just need more time to pay what they owe.

Regardless, there are laws governing unfair consumer practices involving debt collection for both consumer and commercial debtors.

While consumer debtors are afforded more protection than commercial debtors, both groups of debtors have laws protecting them from harassment and unfair practices.

Commercial Debt Collection Laws

With that said, there are some laws and regulations that specifically apply to commercial debt collection:

Fair Debt Collection Practices Act (FDCPA)

The FDCPA protects commercial debtors from harassment, unfair practices by debt collectors, and false or misleading representations by debt collectors. The FDCPA does not apply to businesses collecting their own debts.

Uniform Commercial Code (UCC)

The UCC is a set of laws governing commercial transactions. It was put into place to benefit both creditors and debtors if a debtor files for bankruptcy. The code provides protections for commercial debt collection, allowing secured creditors to take possession of assets given as collateral.

Consumer Debt Collection Laws

There are also some laws and regulations that specifically apply to consumer debt collection:

Fair Credit Reporting Act (FCRA)

The FCRA regulates credit reporting agencies. It was put into place to protect consumers from having errors on their credit reports by regulating how a person’s credit report is reported, how it’s protected, and who has access to the information on their reports.

Fair Debt Collection Practices Act (FDCPA)

The FDCPA for consumers protects them from unfair and deceptive debt collection practices.

This includes harassment, false representation of a debt’s character, amount, or legal status, and unfair practices by third parties who communicate with debtors about their debts.

When To Hire an Attorney To Collect Debts (and When to Debt Collect Alone)

While there is some overlap, typically, it’s the best time to hire an attorney if the debtor is represented by legal counsel or you want to sue for collection.

It’s also ideal to hire an attorney when assets are not easily liquidated (covered by UCC) and the debt amount is significant.

Need Help From a Debt Collection Attorney? Contact Hanna & Jarbo

We are debt collection experts that understand all laws governing consumer and commercial collections. Our team knows the ins and outs of collection laws.

Hanna & Jarbo achieves debt collection 85% of every case. You won’t find better debt collection services anywhere in the Midwest.

Specialty Practice Areas

Regardless of your collection needs, we have the experience and knowledge to help you achieve your goals.

Some of our specialties include:

Client Satisfaction Is Our Priority

We realize that your business success is an integral part of our success too. We believe that happy clients are repeat clients, and we go the extra mile to show our appreciation for your business.

Here is one review from a satisfied client:

“Dalen [Hanna] did a great job explaining the whole collection process. He was nice to the people who owed me money and always returned calls and emails right away. I am extremely confident in writing this review for him. He has collected almost every penny that I was owed.”

What Does Working With Us Look Like?

1. Set up a free consultation call. We’ll explain everything you need to know about debt collection.

2. Provide us with your debtor’s information. We need to know what to collect. Invoices, IOUs, leases, or promissory notes. Whatever you’ve got, we can use it.

3. Sit back and relax. You don’t have to do anything further while we track down and collect your debt. We’ll do whatever is necessary to get your money back.

Benefits of Working With Hanna & Jarbo

Debt collection can be a complicated process, but it’s made much easier if you have an experienced team of commercial debt collectors by your side.

We get to know your business and understand what you need from us to represent your company in the best way possible. We’ll use all available debt collection channels to track debtors and get you the money you deserve.

Contact us today to recover back what is rightfully yours.