3 Things You Should Know If Your Debt Is Purchased By A Third Party Company

Posted on: 30 December 2014

In today's consumption-driven market it is difficult not to acquire some debt. If you have debts that you were unable to pay, it is important to recognize that these debts could be sold to debt purchasing companies.

If your debt is purchased by a collection agency, there are 3 things you should be aware of to ensure that you are able to interact with the collection company to resolve your original debt in the future.

1. Third party companies are often willing to negotiate a settlement.

When your original debtor sells your debt to a collection company, the debt is often sold for far less than you owe. By selling the debt at a loss, your original creditor ensures that they receive some compensation, while the third party purchaser has no guarantee of receiving payment.

You can take advantage of the fact that a collection company paid less than the amount you owe by requesting a settlement. As long as the amount you settle for is more than the company paid to acquire your debt, settlements can be a great way to resolve outstanding debts without paying the full amount owed.

2. You can dispute the amount a third party claims you owe.

If you receive a notice that your original debt has been sold, but you do not agree with the amount of money the collection company claims you owe, you have the right to dispute the debt. According to the Fair Debt Collection Practices Act (FDCPA), third party debt purchasers are required to provide documentation if a debtor asks for it.

You can dispute the amount of money owed, request the name of the original creditor, and request your original account number. This information will help you ensure that you are not being charged too much for a debt that has been purchased by a third party collection company.

3. You do not have to pay debts that have exceeded the statute of limitations.

Many states have instituted a statute of limitations when it comes to debt collection activities. For most states this time period is between three and six years. Since debts can be bought and resold several times, there is a chance that the collection company attempting to collect on your debt doesn't realize that the debt has surpassed the statute of limitations.

A study conducted by the Federal Trade Commission discovered that 27.5% of the debts purchased from one third party company by another collection company were between six and fifteen years old. If you feel that your debt is too old to be collected on, be sure to request documentation regarding the age of your debt from the collection company.

Understanding your rights as a consumer will help you more effectively deal with third party companies that may purchase your debts in the future.