Who Do I Pay If My Credit Debt Has Been Sold?

Debt you incur on credit, such as a home equity line of credit or credit card debt, serves as a liability to you but an asset to your lender. If you do not pay the debt and holding your account is no longer profitable for the creditor, it has the option to sell your credit debt to another company. Creditors typically sell unpaid credit debt to third-party debt collection agencies.

Payment

After your creditor sells your debt to a collection agency, you must pay your credit debt to the collection agency rather than your original creditor. The original creditor no longer legally owns the debt and has already claimed the unpaid balance of your account as a business tax loss. After the sale, the collection agency is the legal owner of your account and your new creditor.

In-House Collection Agencies

Banks and credit card companies sometimes have an in-house collection department responsible for recovering delinquent balances. Although your creditor will eventually sell your account to an outside agency, if the company employs an in-house collection department it will transfer the debt to its own collectors for recovery before selling it.

Because consumers often take third-party debt collectors more seriously than their original creditors, creditors sometimes give in-house collection departments a different name in order to give the department the appearance of being an outside agency. Thus, by paying the in-house collection agency when it contacts you, you are really just paying your original creditor.

Collecting on Commission

Each company's collection strategy differs and, rather than selling unpaid accounts outright, a company has the option to hire a collection agency to collect the debt and pay the company a commission for doing so. If your creditor transferred your credit debt to a collection agency for recovery but still legally owns the account, you have the option to either pay the collection agency or make payments directly to your original creditor.

Post-Judgment Payments

Whichever company owns your credit debt has the right to sue for a court judgment if you neglect to work out a payment plan. Judgments give creditors in most states the right to garnish your wages in lieu of payment. If your creditor is currently garnishing your wages, you do not need to make payment arrangements because the periodic garnishment serves as involuntary payment.

In an effort to avoid further garnishment or prevent it from occurring, you can pay off the full amount you owe. You can either pay the debt owner directly or pay your debt to the court, which will then send the payment to your creditor.

Considerations

If you are not sure if the original creditor still legally owns your debt or if it sold the debt, leaving you liable to a third party, call the original creditor and ask if you can make a payment on your account. If the creditor sold your account and cannot legally accept your payment, it will inform you of the debt's current owner and provide you with your new creditor's contact information so that you can make immediate payment arrangements.