Falling behind on debt payments can happen to anyone. Maybe you lost your job or faced unexpected medical bills. Whatever the reason, you suddenly find yourself unable to make minimum payments on a credit card, personal loan, or other debt.
This brings up a big question: Should you pay the original creditor or the collection agency if your debt is taken over by a collection agency?
The answer depends on whether the original creditor still owns the debt or sold it to a third-party debt collector Let’s break it down
How Debts Get Sold to Collection Agencies
The original creditor (the company you owe money to) will try to get you to pay when you stop making payments. They’ll call you and send notices telling you to pay.
If you still don’t pay after several months, the creditor will likely charge-off your debt as a loss and sell it to a collection agency. This debt sale takes place for pennies on the dollar. The creditor recoups a portion of the bad debt, and the collection agency hopes to profit by collecting the full amount from you.
Other times, the original creditor hires a collection agency to collect on debts on their behalf. In this case, the original creditor still owns the debt while the agency tries to get you to pay.
Either way, once a collector gets involved, they’ll aggressively try to get you to pay through frequent calls, letters, and even lawsuits.
Should You Pay the Original Creditor or Collection Agency?
If possible, it’s best to pay the original creditor before your debt gets sold or assigned to collections. Here’s why:
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Avoid credit damage. Having a collection account on your credit reports severely hurts your credit scores. This can make it harder to get credit, loans, housing, and even jobs down the line.
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Better terms. The original creditor is more likely to offer better settlements, compromises, and ways to pay back the debt than a collection agency.
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Retain goodwill. Paying the original creditor preserves your relationship as a customer. They want to keep your business.
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Avoid aggressive collections. Dealing with the original creditor directly prevents intimidating debt collection tactics.
So if your debt is with the original creditor or a collection agency collecting on their behalf, start there to explore repayment options.
Can You Pay the Original Creditor Once It’s in Collections?
If the original creditor still owns your debt but assigned it to collections, you may be able to negotiate payment directly with the original creditor.
To do this:
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Contact the collection agency and ask for the original creditor’s contact information.
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Call the creditor’s internal collections department.
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Ask if they’ll work directly with you on repayment options.
The original creditor may agree to this if you’ve already started repayment with the collector and proven you’ll stick to a plan.
That person who owed the money no longer has control over it if the debt was sold to a debt collector. To settle the debt, you’ll have to pay the company that bought it.
Tips for Negotiating With the Original Creditor
If your debt is still with the original creditor, you have power to negotiate repayment terms. Follow these tips:
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Know what you can pay. Review your budget to see what’s realistic on a monthly basis or in a lump sum.
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Offer settlements or payment plans. Propose either a discounted lump-sum settlement or affordable monthly payments.
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Get promises in writing. Before paying anything, get written confirmation of settlement terms and payment expectations.
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Ask for credit report improvements. Request removal of negative information if you pay as agreed.
Understanding Your Rights With Debt Collectors
If your debt is with a third-party collection agency, know your rights under the Fair Debt Collection Practices Act (FDCPA). Debt collectors can’t:
- Threaten or harass you
- Lie or misrepresent information
- Call before 8 am or after 9 pm
- Talk to others about your debt
- Take or threaten to take your property
You can report violations to the Consumer Financial Protection Bureau or Federal Trade Commission.
The Bottom Line
It’s best to pay debts before they ever go to collections. But if your debt is in collections, try to negotiate directly with the original creditor if they still own it. This avoids credit damage and intimidating collector tactics.
If the original creditor sold your debt, dealing with the collector is your only option. But remember you have power to negotiate discounted settlements thanks to consumer protection laws. Acting quickly gives you the most leverage.
A collection agency has my debt. Should I pay the debt collector or the original creditor? By
If your past-due debt has been sent to collections, you may still be able to work out a deal to pay it off directly with the creditor. In fact, if you want to work out a debt, you should probably talk to and pay the creditor directly instead of a collection agency. Heres why.
How Do You Find Out If Your Debt Has Been Sent to Collections?
The easiest way to determine if your debt has been sent to collections is to review your credit reports. Once a debt is sent to a collection agency, the debt is reported as a separate account (tradeline) on your credit reports.
The Annual Credit Report Service at www.annualcreditreport.com lets you get copies of your credit report from the three main credit bureaus: Equifax, Experian, and TransUnion. annualcreditreport. com. You can get free weekly reports online. Credit reporting agencies started offering this service during the COVID-19 pandemic and have now decided to keep it going.
Should I Pay A Collection Agency or The Original Creditor?
FAQ
Should you pay a collection agency or a creditor?
In most cases, the original creditor will offer better repayment options than a debt collector will. In the event that your debt was bought by a third party and the original creditor is no longer in charge of it, you will need to pay the debt collectors to settle the account. Written by the Upsolve Team . Is It Better To Pay the Company or Collections?.
What happens if a creditor sells a debt to a collection agency?
If the creditor sold the debt to a collection agency, you can’t negotiate or pay the original creditor. Because the original creditor no longer owns the debt, paying that company wouldn’t satisfy the debt you now owe the collector. How Do Debt Collection Agencies Work?.
Should you pay a debt collector or a creditor?
In most cases, the original creditor will offer better repayment options than a debt collector will. In the event that your debt was bought by a third party and the original creditor is no longer in charge of it, you will need to pay the debt collectors to settle the account. Written by Mae Koppes. Legally reviewed by Jonathan Petts.
Should I pay the original creditor before a debt goes to collections?
If you’re able to do so, pay the original creditor before your debt goes to collections. Having a debt sent to collections will damage your credit score and may limit your options for repayment. In most cases, the original creditor will offer better repayment options than a debt collector will.
Do you owe money to a collection agency?
Even if you pay the original creditor instead of the collection agency, you may still owe the collection agency the money. If you receive a bill from a collection agency, contact the original creditor. Some businesses have in-house collection divisions, while others send unpaid accounts to collection agencies.
Can a creditor sell a loan to a collection agency?
Unfortunately, you’re still obligated to pay a debt even if the original creditor sells it to a collection agency. As long as you legally consented to repay your loan in the first place, it doesn’t matter who owns it. You may be able to pay less than you actually owe, though. Should you pay the company or the collection agency?
Should I pay the debt collector or the original company?
Let’s Summarize… If you have unpaid debt, it’s best to pay the original creditor if possible before your account is sent to collections.May 1, 2025
Can a collection agency charge more than the original debt?
Is it better to pay off collections or credit cards first?
A General Guide to Which Debt to Pay Off First
Collections: Paying off or settling collection accounts could improve some of your credit scores. Newer credit scoring models ignore paid-off collections accounts. Credit cards: If all your accounts are current, shift your focus to paying down credit card balances.
Is it true you don’t have to pay a collection agency?
If you don’t pay, the collection agency can sue you to try to collect the debt. If successful, the court may grant them the authority to garnish your wages or bank account or place a lien on your property. You can defend yourself in a debt collection lawsuit or file bankruptcy to stop collection actions.