Can debts go from one collection agency to another without ever going back to the original creditor?
I don’t understand how collection agencies work. After a collection agency fails to collect a debt, do they just sell it to another collection agency or does it always go back to the original creditor?
The original creditor can hire a third party to collect the debt and pay a commission. This means the original creditor still has legal rights to the debt.
If the original creditor charges off the debt or sells it off, they then loose ownership of the debt. Many collection agencies will take a stab at collecting the debt, if they get nowhere, they turn around and sell it to someone else. You can find portfolios of bad debts for sale at the following web site http://www.insidearm.com/
The amount that companies pay for bad debt depends on the type of account and its age. In general Debts that have recently been charged off: 6 to 7 cents on the dollar.
Accounts that are slightly older and one that other collection agencies have already tried to collect pay 1.5 cents to 2 cents on the dollar. Years-old, out-of-statute debts: are purchased for a penny or less.
Hope this helps answer your question.
If the first collection agency can not get a payment from you, they may do one of two things: take you to court (if the amount owed is worth the hassle), or sell your account to a new agency.
Even if you DO pay, the agency may sell your account off to a new agency, labeling it "unpaid" in the process. Or, if the original creditor changes owners, you may be re-billed. This happened to me once with a phone bill. I had a past-due phone bill with Sprint that went into collection. I had had my landline disconnected and started using only my cell, and simply forgot about my last bill. Once the collection agency notice came, I paid it off in full.
4 years later, my local Sprint service changed their name to Embarq, and I began receiving threatening letters from a new collection agency. The original agency sold all of their Sprint accounts, open AND closed, to the new agency, and relabeled them as Embarq accounts.
I had to go through the hassle of digging out the paperwork from the first collection agency to send to the second collection agency to prove that my bill was for SPRINT, not Embarq, and that it had been paid. When all was said and done, it took about 6 months and over $50 to get it resolved. It almost would have been cheaper just to pay the 2nd bill, even though it was a mistake.
Collection agencies, and many of the people working for them, are thieving, unscrupulous scumbags. If you have a bill that goes into collection, pay it off IN FULL asap, and keep written proof of EVERYTHING.
Meatball and Sgt Big Red both gave pretty good answers. I have a bit to add though.
Generally speaking, an original creditor will either sell or assign a debt to a collection agency. Obviously if it’s assigned, the original creditor still owns the rights to it and will end up selling it or assigning it somewhere else if the first collection agency can’t collect.
It’s rare, but not totally unheard of for original creditors to get back accounts after selling them to a collection agency. From my understanding, there will sometimes be stipulations in the sale that would send the accounts back to the original credit. This usually only happens with smaller original creditors though. Larger ones, like major credit card companies, simply don’t care to deal with the accounts again.
I use to work for a law office that helped consumers from judgments, liens, etc.
The original creditor is the owner of the debt, unless, being the keyword, they sell it.
Example: You owe Bank of America $1,000.00.
After 3 months BOA gives up on collecting the debt and sells it to XYZ Collection agency for $800.00. If they collect the $1,000, then the collection agency just made $200.00. The older the debt, the less chance of the agency collecting it, thus, the value of the debt goes down. So now, ABC Collection may buy the debt for $300.00, if they collect the $1,000.00, then they just made $700.00.
Hope this helps!
This site has a lot of great information. Have you thought about starting a Facebook Page for it?
id like to echo the facebook suggestion! some useful info, could come in handy
Yes, if a collection agency found itself unable to collect the debt from you, it can sell off your account to another agency.
Thanks for your responses, everyone. I was looking for an answer to this myself…
I had a debt problem once and went into debt settlement. I found a few bills, like Nordstrom Visa, that went from it to a collection agency, back to Nordstrom, then to a new collection agency. Others went straight to a collection agency and bounced from agency to another until I got the best deal. I used a safe payday loan to finally get rid of my last bit of debt. It worked just fine and I paid off my creditors and my payday loan!
IMO, if the collection agency is unable to collect the debt they can do the following:
1. Take you to the Court
2. Sell the Debt to another Collection Agency
3. Return the debt to the Original Creditor who can again hire a new Collection agency to recover the debt.
If you are tired of dealing with debts and want to end with this problem for good,then the good start for you is to choose payday loans companies.These loans are short termed and thus you won’t have a debt hanging over your head for a long time.
I have a debt/loan that went into default, it was obtained illegally in my name. I never paid the first debt collector on this one debt. Years later they sold it or hired another debt collector to obtain payment. I sent them an ID Theft Affidavit and they stopped seeking to collect the debt because of what I proved, the debt was obtained illegally. However the debt was sold back to the first Debt Collector who is trying to collect on this debt. Is this illegal? Can they collect on a debt that another collector stopped collecting because I proved my innocence? The first Debt Collector doesn’t consider my FBI documentation as anything and is still seeking payment.
The collection agency has rights to take you the court if they fail to collect debt from you.
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hay thanks for the post , yes you are correct agency fell to collect debt then they they may hand over it to other also.
A debt is often charged-off at 180 days. An unpaid charge off is a serious negative on your credit report. As the days past due get greater and geater, the debt is often sold again and again to different agencies for less and less money as Jason above mentions.
I have to show my affection for your kindness giving support to those people that must have guidance on this particular field
saglikhaberlerin´s last [type] ..Çocuklarda Asperger
I f the real creditor charges off the debt or sells it off then they can easily loose ownership of the debt. Several collection agencies will take an attempt at gathering the debt. If they don’t get from anywhere then they will turn around and sell it to someone else.
Hay thanks for the post
vibrator´s last [type] ..Şişme Bebek
It will never go back to the actual creditor once a certain time frame has passed. It’s why they send it to a collector in the first place. Typically the collector doesn’t change, because the company that you owe contracts them to do the work for them. But, if the company changes collectors, I’m sure it’s possible.
ten charged-off at 180 days. An unpaid charge off is a serious negative on your credit report. As the days past due get greater and geater, the debt is ofte!!
gogus buyutucum´s last [type] ..Düzce Dış Cephe Kaplama
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Why if debt is $60 and 3 yrs old would one collection company sell to a new collection agency who then has no information about conversations you had with other agency? My phones are on donotcall registry and agency says that doesn’t count with them. I kept trying to answer my cell and it kept hanging up I finally dialed number back and asked why all the hang ups to get a nasty lady tell me “she” didn’t hang up the auto dialer did. Why is this ok? Then they tell me donotcall has nothing to do with them since they again aren’t “selling” anything. I haven’t been notified that there is a new agency trying to collect other then this phone call. I just don’t understand the agent said something about a settlement date being 5 days from today and that they will get paid. They have also now dug up my parents number and call them. This is only $60 but I don’t have it this started at about $45 that I forgot about and now this interest has it at $60 how is that fair.
If the first collection agency can not get a payment from you, they may do one of two things: take you to court (if the amount owed is worth the hassle), or sell your account to a new agency
i think they simply shell it to the other agency , there is no roll of original creditor.