The difficulties of working with a collection agency may be familiar to you if you’ve fallen behind on your monthly credit card payments or neglected to pay a medical bill on time. Find out why creditors may sell debt to collection agencies and what steps you can take to pay it off. Find out how your debt ends up in the hands of a collector.
Debt is money that you owe to an individual, a financial institution or a business. Carrying debt is not always a bad thing. For instance, you might take out a loan to cover the cost of a big purchase like a house, a car, or college tuition. In these situations, you take out a loan from a bank or another kind of lender, and you pay back the money according to the terms of the loan.
However, what occurs if you are unable to make your payments on time? Unpaid debt can result in fines and penalties as well as damage to your credit report. Additionally, if your original creditor thinks you won’t be able to pay, they might hire a debt collector to help them get the money you owe. In some cases, they may even sell the debt to the collection agency outright.
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What to know about debt sold to collection agencies
Your creditors can transfer and sell your debt to a collection agency without your permission. When creditors do not think you will pay what you owe, they may decide to sell a debt, frequently for far less than it is worth. Selling the debt can help them recoup at least some of their investment.
When a collection agency acquires your debt, you are typically notified by phone or in writing. The debt collector is required by the Fair Debt Collection Practices Act to provide a written notice, known as a debt validation letter, within five days of their initial correspondence. Generally, your letter will provide information about the total amount of your debt, the creditor requesting payment, and guidelines for contesting your debt.
Your account might be transferred to a new collection agency if you and your debt collector are unable to come to a repayment arrangement. This procedure can be repeated numerous times, far longer than your state’s statute of limitations for debt collection, or the short period of time during which debt collection usually takes place. If you dont pay, the collection agency may attempt to garnish your wages. They may even seize your property according to the terms of your loan or your credit accounts contract.
Even though they aren’t allowed by law to sue you, a debt collector may still threaten to sue you in order to scare you into paying. For example, a debt collector typically cannot file a lawsuit to collect the debt if your state’s statute of limitations has passed. These legal safeguards can help protect vulnerable debtors from falling victim to predatory collection practices.
What is a debt collection agency?
Collection agencies are third-party organizations that recover unpaid debts for profit. In some cases, theyre paid by your original creditor to help collect the money you owe. Or they may purchase your past-due account from your creditor before taking over collections. In any case, the main objective of collection agencies is to get in touch with you regarding your outstanding debt and convince you to make the payment.
If My Debt Is Sold to a Collection Agency, Do I Still Have to Pay It?
FAQ
Can you dispute a debt if it was sold to a collection agency?
Am I responsible for a debt that has been sold?
What happens after your debt is sold?
How do I get rid of sold debt?
Should I Sell my unpaid debt to a debt collection agency?
Having your unpaid balance sold to a debt collection agency might mean that you don’t need to deal with the original creditor anymore, but you can rest assured that the debt collectors are unlikely to rest until you pay what is owed.
Do I owe a creditor money if a debt is sold?
Yes. If your debt is sold to a debt purchaser like a debt collection agency, you will owe the purchaser money, but you will not owe the original lender anything. It is also worth noting that the debt purchaser is required to adhere to the same rules and regulations as the original creditor when attempting to collect on the outstanding debt.
Do you owe money if a credit card debt is sold?
Until the debt is either paid or forgiven, you still owe the money. This is true even if it’s a credit card debt that is sold to a collection agency and even if you think it’s unfair. Why do you still owe the full amount if the original creditor sold it and made some money on the sale? Let’s look at this issue a little closer.
Can debt be sold or assigned?
Debt can indeed legally be sold or assigned, and a creditor’s doing so does not relieve the debtor of obligation to pay — otherwise, the debt purchasing industry would not exist.