Is is true, that bill collectors buy your old debts for 3 cents,& then try to collect the debt for themselves?

Question

I heard that if the orginal debt is written off, then a bill collector will buy it and the orginal company doesn't get the money, it goes to the Collection agency. So if this is true, then we don't have to pay our debts once the orgianl company charges them off. Right?

Answer 1

Nope, not true that you don't have to pay them once the original company charges them off. The only way that you can avoid paying them off is if you have had them discharged through bankruptcy, or if the legal time limit for collecting them has expired. And even then, sometimes collectors still try to collect on the ones that are past legal time limit for collecting. Those kinds of debt are called "Zombie Debt".

Answer 2

Part of that is correct and that is once an original creditor decideds they aren't going to use any more of their time or resources on attempting to collect the debt from you they can either assing or sell the debt to a debt collector. Depending on the age or amount of the debt sometimes it is sold for pennies on the dollar.

It is untrue that you no longer owe the money or don't have to pay it. You still owe the debt and assuming the new creditor can provide you with debt validation (proof of debt and the fact that they are now legally entitled to collect it) you are legally required to pay the debt to them.

There is no way to know if your debt has been assigned (meaning the collection agency is collecting the money and then spliting it with your original creditor) or sold. That is between them and the company you owed money to.

If the statute of limitations is not expired on the debt then debt collector has the right to pursue legal options to collect the debt (ie sueing you and getting a judgment against you for the amount owed plus fees).

For more information on debt validation please see this website:

http://www.creditinfocenter.com/rebuild/debt_validation.shtml

Answer 3

Wrong.

The original company charges off the debt and sells a group of bad debt at a discount to a collection agency. The collection agency works the accounts and tries to collect as many accounts as they can. The collection agency then sells a group of accounts they haven't collected to another collection agency, at a deeper discount.

This continues till it gets down to the hard-core deadbeats and the "scum" collection agencies that buy the debt for pennies on the dollar.

The agreement you signed with the original creditor includes verbage that allows them to sell the debt off to a third party. You created the debt; you owe the money.

Answer 4

They do buy them off the original place you owe but they charge fees and interest to it plus what you owe the other company.

You have a medical dept of $1,000. You cant make the min payment so it goes to collections. Your $40 a month that used to go straight to that number is now $50 because $7 goes to interest and $3 goes to the "Monthly installment fee". The collections company gets the extra $10 a month. They still pay the medical place, but they charge more for it. And report that to your credit report so you have bad credit. It's bassicly a middle man thing.

Hate to tell ya, but your stuck with your bills and having it go to collections is a bad thing.

Answer 5

No, I believe what happens is that the collection agencies have a contract with companies to collect your debt and then split it with the company.

Answer 6

I don't know what the amount is they buy it for, but that's basically correct. And those organizations are ruthless in their attempts to collect. If you don't pay your debs, even if the original company writes if off, it DOES affect your credit score.