Debt Recovery Partnership Agreement

What a good one includes

• Clear definitions of initial capital contributions and how recovered funds are split after deducting operational costs.
• A strict compliance clause requiring both partners to adhere to the Fair Debt Collection Practices Act (FDCPA) and state-level regulations.
• Robust data security and consumer privacy protocols to protect sensitive debtor information under GLBA and other privacy standards.
• Specific allocation of daily operational roles, detailing who handles skip-tracing, debtor negotiations, and legal escalation.
• An indemnification clause that shields one partner from legal liabilities arising from the other partner's non-compliant collection tactics.
• A structured dispute resolution and dissolution roadmap outlining how existing debt portfolios will be divided or liquidated if the partnership ends.

Common mistakes to avoid

• Failing to explicitly assign liability for regulatory violations, leaving both partners legally vulnerable if one collector uses illegal harassment tactics.
• Neglecting to define ownership of the debtor data and proprietary skip-tracing lists after the partnership dissolves.
• Omitting a clear mechanism for how direct costs, like court filing fees and process server rates, are reimbursed before profits are split.

Frequently asked questions