Having debt means dealing with a creditor, and in some cases, a debt collector as well. A debt collector is not the same as a creditor, although both may try to get you to pay what you owe. The differences between creditors and debt collectors make a difference in regard to whom you pay, as well as the rights you can exercise.
Credit Extension
The primary distinction between a creditor and a debt collector is that a debt collector does not offer a line of credit the way a creditor does. You cannot appeal to a debt collector to get a loan, for example, because it does not have the money to lend. It is a debt collector's job to get money back, not to give it out.
Getting Your Money
By law, no person or business can seek to collect on a debt it does not own -- that is, it cannot ask for money it didn't give you, unless it has purchased your debt. Creditors provide money, so they have a right to collect. With a debt collector, your debt may be assigned or purchased. If the debt is assigned to the debt collector, the debt collector keeps a percentage of whatever it collects, but does not actually own the debt. This means you legally should pay the creditor, not the debt collector, if debt is assigned, unless the credit contract states you also agree to pay companies or individuals to which the debt is assigned. If the creditor sells your debt, however, then the ownership of the debt transfers to the collector, and it has a right to 100 percent of all of the payments you make. In this case, you pay the collector, not the original creditor.
Relationship, Time and Duration of Contact
You make initial contact with a creditor in hopes of a positive financial relationship any time you'd like a new line of credit -- you do not have to be financially unstable to do this, and, in fact, creditors extend the best terms to those who pose the lowest risk of default. In some cases, the relationship you create lasts for many years. By contrast, contact with a debt collector usually starts off when you're financially struggling. The relationship tends to be tense from the beginning due to the demand for payment. It ends as soon as you've proven you don't have to pay, whenever you reduce the owed balance to zero or when the statute of limitations on the debt expires.
Considerations
Both creditors and debt collectors are able to collect debts, but knowing the difference between the two is a crucial part of debt defense. For example, if you know your debt has been sold, you also know your original creditor shouldn't be sending you collection notices. If you are ever unsure of who is dealing with your debt, call the creditor and ask. Both collectors and creditors should be able to validate the debt -- that is, prove that you owe. If they can't do this, you likely won't need to pay. Don't be afraid to hire legal aid if necessary to assert your rights under the Fair Debt Collection Practices Act with either party.
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