Selling Debt to Collectors
There are many reasons to avoid selling your debt to collectors. First, you should never sell your debt to anyone without your permission. Despite the adage that the creditor gets what they deserve, this is not true. Anytime a debt collector tries to get money out of you, they should first get your permission to do so. Once they have that, they can go about collecting on your account. In addition, collection agencies are required to provide a written notice to you, detailing the debt and its original creditor, so you can dispute the purchase.
A study by the FTC found that some collection agencies were still pursuing debt that had passed the statute of limitations. The study found that consumers were not aware of their rights and that potential errors could occur during reselling. It was not possible to evaluate the practices of the smaller debt buying agencies, which were more likely to pursue older debt accounts. Therefore, the FTC recommends that people with arrears understand their rights and the legality of the collection agency.
The most important reason to avoid selling debt to collectors is that they do not have your consent to do so. The person you sell your debt to does not owe the original creditor and will need your permission to collect on your debt. The debt purchaser is legally entitled to the same rights as the original creditor. For example, a debt collector cannot unilaterally spike the interest rate on a delinquent account.
Why You Should Avoid Selling Debt to Collectors
Secondly, debt collection is a hassle. It can negatively affect your credit report. Whether or not you are able to pay the debt, the collection agency will try to collect on your account. After a certain amount of time has passed, a collection agency can sell your debt to another agency. This reselling of debts has created a growing number of problems for consumers, and has raised questions about the accuracy of information.
However, the process of selling debt to collectors has many advantages. The original creditor benefits from the sale of the debt, while the debt subject is able to settle the overdue amount. Additionally, a debt seller who wants to avoid the hassle of collecting can choose to use a collection agency. The only downside to selling your debt is that you will have to pay the debt in full. If you do not want to make payments to the agency, you can hire a collection agency.
When you sell your debt to a collection agency, you should know that you are not owed the original lender’s money. Rather, you will be owed the debt buyer and he or she will make claims for it. Furthermore, you should understand that the collection agency will not be able to unilaterally increase the interest rate on an account that is past its statute of limitations. There are some other disadvantages to selling your debt to a collection agency.
