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I am interested to know if there are any laws (federal or state) protecting small businesses with respect to Commercial Debt Collection in NJ?  My company has been contacted by an investigator with Kearns, Brinen & Monaghan regarding a breach of contract.  As I understand it, we had a service contract with a communications service provider called Line Systems.  We were also provided with phones from the company, which I am not sure if we rented or received free with service contract or what.  

In any case, when it was time to renew the contract we chose not to and went with a new service provider.  For us, Line System's service was spotty, reception was crackly and cut in and out, and we were just unhappy with the overall product and the service provided.   There was also downtime.  Sometimes we were a few hours without phone service - it happened often enough that we decided to move on rather than continue to lose business. 

We have since discovered the contract had an automatic renewal clause.  The person that negotiated the contract is no longer with our company and nobody else realized the clause existed.  We did not notify Line Systems in time for whatever the cutoff date was and they rolled the contract and are coming to us for $17,000 for breach of contract.  But we contend that the downtime and service problems resulted in loss of business for us and if anything they owe us money for lost business. 

I realize that commercial collectors are a lot less restricted than consumer collectors.  They can act despicably without repercussion.  The only real regulation I have found is collector bonding required by particular states.  The collector is threatening a law suit, liens, etc.  I have requested a copy of the contract from my team for more details.  Can I request proof of debt from them or does that only apply in consumer collection?  Not sure which steps to take --- 

Anyone familiar with this field? 

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@huntrosa8 just some things you may want to write down for future reference- do you have all the service calls for outages documented? when you went with the new company how long was that into the auto renewal period with the old firm? How were you thinking you closed the old account, did you just quit paying or did you turn in equipment thinking you were done with no notification the account was still open? If $17,000 is the rate for a year and you cancelled two weeks into this renewal after getting a surprise bill, the math should be challenged. You'll definitely want to see all the contract paperwork and cost itemization. What they'll give you now who knows but if this goes to court, they'll have to if it's through a discovery request.

You can check cases on Google scholar to see what the NJ courts have decided on choice of law, such as using PA if it's in the contract. Does your contract with them have an arbitration provision?

You can see if they meet the bonding requirement here http://www.state.nj.us/treasury/revenue/collagency.shtml

My company has been contacted by an investigator with Kearns, Brinen & Monaghan regarding a breach of contract.

A cease and desist letter would be something to consider. Sent on atty letterhead would be best. I see they're on BBB, so if you feel they're interrupting your business with calls after being told to send everything in writing, a BBB complaint would be something to try.

 

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@huntrosa8 one thing you may want to research or ask an attorney about is how NJ looks at automatic renewal or evergreen clauses. A quick search shows your company most likely wouldn't be stuck for payments covering the entire renewal period just when equipment was still in your possession. Also, if you were late with a payment during the old term, that would be something that could halt an auto renewal going into effect.

 
Pennsylvania would also seem to favor cancelling the automatic renewal if notice was given that you wanted to cancel, even if it was late.
 
We were also provided with phones from the company, which I am not sure if we rented or received free with service contract or what.  
 

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