It's always better to pay the original creditor, but once the debt is turned over to a collection agency, you're going to have to pay the agency. The original creditor has sold the debt to the collection agency and in most cases won't deal with you anymore.
Once your debt has been sold you owe the buyer money, not the original creditor. The debt purchaser must follow the same rules as your original creditor. You keep all the same legal rights. They cannot add interest or charges unless they are in the terms of your original credit agreement.
The lender or creditor pays the debt collection agency a percentage of the invoice to recover various debts, from credit cards and medical bills to business and utility bills.
Your credit score will take a hit. And you could even be sued and have your wages garnished. At some point in the collections process, ideally before being sued, discuss the situation with a nonprofit credit counseling agency or a bankruptcy attorney. Nonprofit credit counselors are the best place to start.
Debt collectors are not permitted to try to publicly shame you into paying money that you may or may not owe. In fact, they're not even allowed to contact you by postcard. They cannot publish the names of people who owe money. They can't even discuss the matter with anyone other than you, your spouse, or your attorney.
Make sure you dispute the debt in writing within 30 days of when the debt collector first contacted you. If you do so, the debt collector must stop trying to collect the debt until it can show you verification of the debt.
Debt collection thresholds vary widely and depend on several factors. While there's no legal minimum, practical limitations often determine the smallest debt amount collection agencies will pursue.
Most states or jurisdictions have statutes of limitations between three and six years for debts, but some may be longer. This may also vary depending, for instance, on the: Type of debt. State where you live.
You also have the right to dispute the debt if you believe it is inaccurate, the amount is wrong or you don't recognize the debt. You can request validation from the debt collector, requiring them to prove that you owe the debt and that they have the legal right to collect it.
While smaller debts are less likely to result in legal action, there are no guarantees. In many cases, though, debt collectors will prioritize larger debts, as they offer a higher return on the time and legal fees associated with a lawsuit.
It quiets things temporarily, but the problem remains. Ignoring them often escalates collection attempts. They may contact you more frequently, file a lawsuit, garnish wages, or put liens on assets.
The phrase in question is: “Please cease and desist all calls and contact with me, immediately.” These 11 words, when used correctly, can provide significant protection against aggressive debt collection practices.
Keep in mind that, just like collectors, creditors are not compelled to accept your payment offer. The idea that they have to accept your payment or discharge the debt is a myth (see first paragraph). When creditors refuse payments, it's usually because company policy prohibits it.
Even though your card issuer "writes off" the account, you're still responsible for paying the debt. Whether you repay the amount or not, the missed payments and the charge-off will appear on your credit reports for seven years and likely cause severe credit score damage.
Typically, debt collectors will only pursue legal action when the amount owed is in excess of $5,000, but they can sue for less. “If they do sue, you need to show up at court,” says Lewis-Parks.
Most consumer debts will “expire” after three to six years, meaning a creditor or debt collector can no longer sue you for them. You're still responsible for paying old debts, but waiting until the statute of limitations runs out might help you avoid future legal issues.
Specifically, the rule states that a debt collector cannot: Make more than seven calls within a seven-day period to a consumer regarding a specific debt. Call a consumer within seven days after having a telephone conversation about that debt.
A creditor can't file a lawsuit if it's been more than four years since the last activity on the account. This is called a statute of limitations. If you have not made a purchase on or made a payment to the credit card account for more than four years, that debt is considered expired.
If you have very little income and property, the debt collector might not be able to collect even if they win their case. If you are in this situation, the creditor may accept your offer of a voluntary payment on a portion of your debt.
In some cases, you may be able to settle for much less than that 50.7% average. Collectors holding old debts may be willing to settle for 20% or even less. The statute of limitations clock starts from the date the debt first became delinquent.
Generally, paying the original creditor rather than a debt collector is better. The creditor has more discretion and flexibility in negotiating payment terms with you. And because that company might see you as a former and possibly future customer, it might be more willing to offer you a deal.