What Happens When Your Debt Has Been Sold
When you have owed money for an extended period of time, the original lender or collector will often hand your debt to a debt collection company. That debt collection company can then sell your debt to other companies. Your debt can actually change hands multiple times.This leaves a confusing trail and uncertain pattern to follow if you are trying to find out specific information about the debt.
Can A Debt Be Sold?
The answer to that is yes. Just because you originally took out a loan with one particular lender doesn’t mean that they’re required to hold onto it for the life of the loan. It’s quite common when a loan is falling behind for it to be sold to a different company that specializes in collecting old debts.
There is a distinction between assigning the ownership right of the debt and just transferring the debt to a debt collector. Sometimes the debt stays with the original creditor, but there may be a new company that’s just collecting on their behalf. Then there can be assignment of the debts as a whole. This may make little difference to you on the consumer side, but it’s just worth being aware of. A Very common question that we receive is, “I’ve read on Google that when these companies sell their debts, they sell them for pennies on the dollar. Why can’t I just pay this company pennies on the dollar to get rid of the debt?” While it may be that the company that acquired your debt paid less than face value in order to have the right to collect on the debt, that doesn’t mean that you absorb the same benefit that they got. When a debt is transferred, the company that acquires the transfer rights acquires the right to collect on the full balance, not the partial balance. This is particularly important if the case has gone to court, because if they get a judgment, and particularly a judgment by default, then they will seek to collect on the full balance of the debt often by garnishing wages or a bank account.
What To Do When Your Debt Has Been Sold
When your debt has been sold, there are certain things that you need to look for. Most importantly, you want to look for notice in writing. In Florida, you’re required to get notice in writing of debt that has been assigned. If you get that notice in writing, you may want to confirm with the company that used to have your debt, that the debt has in fact been assigned.
The other thing that you’ll want to check for verification is going to be your credit report. Your credit report is particularly important because what commonly happens when debt is assigned is that the credit reporting is re-aged. What is re-aged credit? When someone falls behind on a revolving credit line, there is a limited window of time for the company that you had the loan with to report the negative activity. Usually that window of time is seven and a half years, particularly with respect to credit card debt.
When debt is sold or assigned a lot of times, the new company that is collecting on the debt will treat the date of transfer like the first date that you fell behind. This can leave the delinquency on your credit report for a longer window of time, which extends the damaging impact to your credit.
What are your options when a company has sold your debt? For the most part, your options are nearly identical to the options that you would have with an original creditor.
You would first want to look at the age of debt and make sure that it’s still collectible. If a debt is too old, if it is past what’s called the statute of limitations period, it may be that the creditor can’t sue you on the debt. So even though the debt may exist, there isn’t anything they can do to collect on it. In this case your best option may be to do nothing. You also have the option of settling on the debt, either directly or with the aid of a professional.
Also, just like in the debt before it was transferred, you can assert your rights to control how you are communicated with, with respect to the debt. You can send the new debt owner a cease and desist letter, found pretty easily through Google search, asking that you no longer wish to receive communications with respect to the debt. You can also tell the new loan owner that certain communications aren’t convenient to you, like calls during working hours, or otherwise control the means of communication. If you have questions on debts that have been sold, please feel welcome to schedule a complimentary consultation with one of our qualified attorneys, we’ll be happy to evaluate your options for you.
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- Confirm that the debt has actually been sold. If you are unsure, it could be that the new debt collector is simply acting on behalf of the original lender and is not actually in charge of the debt. When a debt collection company buys a debt, they have paid the original lender a portion of the debt so that they can now own the debt and, hopefully, collect the balance. To determine whether your debt has been sold, you can ask the company if they own the debt, or check to see where the payments are going. If letters instruct you to pay the company directly, then the company probably owns the debt.
- Find out when the last time you made a payment was. Most debts have a statute of limitations, and when a new company purchases the debt, they will try to collect whether the statute is up or not. If you ask if the debt is time-barred, or subject to a statute, the collector must respond truthfully, as required by the Fair Debt Collection Practices Act. If you believe the debt has been in existence for a long period of time, hold off on communicating with the company before seeking legal counsel. Never make a payment or acknowledge your debt without speaking to a professional attorney. You may be putting yourself in a vulnerable position, and paying a debt that no longer applies.
- If you do come up with a payment plan that works for you, you will pay the debt collector directly. You cannot pay the original lender, as they no longer own the debt. Remember that all communication, including payment, will now go to the debt collection company. If you are sued by the debt collector, contact an attorney right away – don’t panic! By selling your debt, your original lender has actually put you in a better position. Your original lender would have access to more of your information and payment history which would help them build a better case than a debt collection company. If you seek experienced legal counsel, they should be able to help you.
At the Ziegler Diamond Law: Debt Fighters, we take your rights under the FDCPA seriously. For a debt collection, bankruptcy, or foreclosure lawyer in Clearwater FL, contact our office for your legal needs.
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