When you miss a payment to a creditor, such as a credit card company or loan servicer, it immediately initiates collection activity by calling you or sending letters and email notifications that the payment is late. Creditors don't pursue you for payment indefinitely, however. Eventually your creditor will stop dedicating the company's time and resources to your delinquent debt and send your account to a collector to recover.
In-House Collections
Whether or not you can pay your original creditor depends on a variety of factors; one of which is the type of collection agency that owns your account. If the creditor did not send your account to an outside agency and instead transferred it to the creditor's in-house collection department, paying the collection agency is no different than paying the original creditor since the creditor owns the collection agency it is using to recover the debt. If the creditor transferred you account to an independent collection agency, however, paying the original creditor may no longer be an option.
Third-Party Collectors
One way in which collection agencies obtain debts is by purchasing collection packages from creditors. These collection packages contain the account information for numerous debtors who owe debts to the original creditor. After purchasing a collection package, the collection agency owns each of the accounts listed and can proceed recovering the debts.
After a third-party collection agency purchases your debt from the original creditor via a collection package, the original creditor no longer owns the right to collect the debt. If you attempt to pay through the original creditor, it will provide you with the collection agency's contact information and direct you to pay the collector.
Debt Recovery Contracts
In some cases, creditors transfer delinquent accounts to third-party agencies yet maintain ownership of the account. Should this occur, the collection agency works out a contract with the creditor in which it attempts to recover the debt and the creditor agrees to pay the collection agency a portion of whatever amount it recovers.
If the collection agency is working for your creditor under a contract, the creditor still legally owns the account and can still accept payments should you wish to satisfy your financial obligations. Every creditor differs, however, and your creditor is within its rights to refuse payment -- instructing that you instead submit payment through the collection agency.
Considerations
Although you may wish to pay the original creditor in order to avoid communicating with the collection agency, paying the original creditor isn't always an option. In this case, its better to pay the collection agency than refuse to pay at all. Collection agencies have the same rights as original creditors when taking legal action against consumers who do not pay their outstanding balances. If you cannot afford to pay your debt in one lump sum, talk to the collection agency about setting up a payment plan or reducing your balance in exchange for your payment.
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