Does a collection agency have to ...?

Question

get permission from the original creditor to sue a debtor? and if they (the original creditor) accept payments from the debtor after suit,has the original creditor broken any contracts with the collection agency?

Answer 1

Much depends on if the collection agency was assigned the account or if they actually purchased it.

If the account was assigned then the original creditor would probably have to give the go ahead to sue.

If the account was purchased then the original creditor is pretty much out of the picture.

If the debt was assigned and IF the original creditor accepts payments from the debtor, they will more than likely turn around and pay the collector the agreed upon amount.

Answer 2

Oftentimes, when the original debtor cannot collect, they hire a collection agency to do it for them. Most common agreement is they pay a fee for the service otherwise, the collection agency gets a percentage from the collected amount that is agreed upon by the both of them. Included in their contract of agreement is, in the event of a court action or litigation that may arise from the non-payment of the debtor, they have the authority to file charges against the said debtor. In instances when the debtor fails to pay his obligation and is subsequently sued, the collection agency exercises his authority given to him by the creditor. And in the event that the creditor accepts payment from the debtor after a case has already been filed in court by the collection agency, the creditor is accountable to the collection agency and has breached their contract of agreement. This, of course, is true if it is stipulated in their contract that after a suit has been filed by the collection agency, the contract between creditor and debtor is no longer binding

Answer 3

It depends what agency.

Answer 4

no.