You should note one crucial thing about debts: regardless of how long you stall your repayment, the creditor will still end up getting what you owe him or her. The creditor can keep on adopting various tactics in ensuring that you pay what you owe, or if he is fed up with your uncooperative attitude, he can sell your debt to a collection agency. What happens when a debt is sold to a debt buyer?
When your debt is sold to a collection agency, this agency will be in charge of compelling you to pay your debt. Debt collection agencies use calls and letters to persuade debtors to pay what they owe, and they can sometimes be brutal.
Debts are usually difficult to pay back, primarily those huge debts that come with a high-interest rate. If you have multiple debts, like a credit card, mortgage, and the likes, paying them off in time may be difficult, especially if you find yourself in a dire financial situation. If you fail to pay your debt, your creditor will sanction you, especially when it’s past the due date. It’ll get to a point when the creditor will sell your debt to a debt collector. But who are collection agencies? What happens if your debt is sold to one? If a debt is sold to another company, do you have to pay? Read on to find out.
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What Happens When a Debt Is Sold to a Collection Agency?
Taking out loans to pay for urgent expenses or products services and products you cannot afford is not a bad idea. If you have a good business idea, you could take out a loan to actualize the idea and pay back the loan before the due date, along with any interest rate that applies.
If you own a credit card, it is essential that you pay your bills before the deadline to avoid late payment fees and the high interest rate, which could make it more difficult to settle the debt. The same applies to other loans. In a nutshell, ensure you pay back what you owe before it is too late.
I understand that paying back a loan or different loans and catering to yourself and your family can be a hassle. However, there are a few effective debt relief programs out there that can help you in paying back what you owe. In fact, sometimes, if you are lucky, you can negotiate for a debt settlement with your creditor.
What Happened if I Don’t Pay My Debt?
There is no running away from your debts. Even if you die with unpaid credit card debt, for instance, your estate will be used to pay what you owe. Thus, I’ll advise that you carefully weigh your options before you think of taking out a loan. And only take out loans you are confident that you can pay back without any difficulties. You don’t want to be in a situation whereby you have lorry loads of debts to pay and several bills to settle. Dealing with such a huge financial burden could affect your health.
With that said, what happens if you don’t pay what you owe?
If you fail to pay your debt, the creditor may do the following:
- Increase your interest rate
- Slap you with late payment fees
- Request for a writ to garnish your wage; and
- Sell your debt to a debt collector
For the sake of this article, we’ll be looking at the last. A creditor can sell your debt to a debt collector if you are uncooperative. And, of course, selling debt to a collection agency is legal. I’ll advise that you pay off what you owe or negotiate with your creditor before it gets to this stage. You don’t want to have anything to do with these agencies as some of them can be very frustrating.
Let’s look at who these agencies are before delving into what happens when debt is sold to a collection agency.
Who Is a Debt Collection Agency?
A debt collection agency is a company hired by a creditor to chase after debts that are long due or form accounts that are in default. Hiring a debt collector is usually the last resort of most creditors. Creditors or lenders usually hire these agencies after making multiple futile attempts to collects what a debtor owes.
Why Do Creditors Sell Debts?
Creditors specialize in lending individuals money and collecting it. They don’t specialize in ruining after individuals to pay debts that are long due or locate individuals who are owing them. Instead of wasting their resourcing and time in launching a hunt for debtors or carrying out detective jobs, they usually seek the services of debt collector agencies or sell the debt to debt buyers.
If you somehow discover that your debt has been sold to these agencies, what should you expect? What happens next?
When your debt is sold to a collection agency, the agency will be in charge of collecting what you owe. The agency will call to inform you of the change. Afterward, you’ll be required to pay what you owe to the agency. If you aren’t cooperative, have it in mind that agency will adopt several tactics to compel you to pay what you owe. They call you and send you letters to persuade you to pay up your debt.
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Can You Dispute a Debt if It Was Sold to a Collection Agency?
While dealing with debt collection agencies, ensure that you are smart. You shouldn’t agree to what any agency tells you without verifying their claim. Many Americans owe debts, so it is possible for these agencies to accuse you of owing a debt that you know nothing about. If this somehow happens, you’ll have to dispute the debt. But can you dispute a debt that was sold to a debt collector?
You can dispute a debt that is sold to a collection agency. Worthy to note is that your rights are the same as if you were dealing with the original creditor. If you don’t believe that the debt is yours or if the balance you are asked to pay is wrong, you can dispute the debt.
When dealing with these agencies, people do ask: “If a creditor sells your debt, are you obligated to pay?” Of course, you are, as the debt is now owned by whoever buys the debt. Talk to a financial adviser if you need any advice on how to handle these agencies.
