Key Takeaways
- When debt is sold to a collection agency, your account moves ownership, but doesn’t change what you owe.
- The information transferred when a debt is sold includes your personal information, the original creditor, and an itemization of the amount owed.
- You can request written verification of the debt within 30 days of the first notice you receive.
The new company receives your identifying information, such as your name, account number, balance, and any dates of changes. Even though a debt gets transferred from one company to another, the amount and original terms remain the same.
If a different company now owns your account, here is what moves with it, what you can request, and what changes.
What Happens When a Debt Is Sold
If you haven’t paid your outstanding debt in some time, you may not realize it was sold. When you’re contacted about repaying a debt, the notice might come from a company you don’t recognize.
After several months of nonpayment, your account may be closed and the debt charged off with the original creditor. Your balance isn’t forgiven; it just changes ownership. After a charge-off, the original creditor may sell the account to a debt buyer or a company that purchases accounts and collects on them.
You may get a notification from the original creditor that the outstanding debt was sold and provided contact information for the new owner. However, even if you do not, you’ll learn about the change of hands when the new company contacts you to collect on that outstanding debt, usually through letters, emails, or phone calls. You’ll get details about that debt, like the name of the original creditor you owe the debt to, the amount you owe, and information about disputing the debt. It’s the new company’s responsibility to send this information within the first five days of initial contact.
What Information Transfers With Your Account
When your account moves from one company to another, several types of information may transfer along with it. The purpose of this information is to help the new owner identify the account, understand the amount owed, and manage the account after ownership changes.
Information transferred may include:
- Your name, address, phone number, and other identifying information
- The name of the original creditor
- The account number associated with the debt
- An itemization of the balance, including principal, interest, fees, payments, and credits
- Information associated with ownership and transfer of the account
When people ask what a debt buyer receives, the answer is typically enough information to associate the account with the correct consumer, understand the amount owed, and manage the account after ownership changes. This information helps the new company understand the balance reflected in the records it received and administer the account moving forward.
What records are included can vary depending on the type of account, its age, and the information maintained before the transfer. Not every record associated with an account necessarily transfers when ownership changes. For example, a debt buyer may not receive a complete payment history or every historical document connected to the account. While documentation can vary, the new owner receives information that allows the account to be identified, managed, and, when necessary, verified.
Does a Debt Sale Change What You Owe?
A debt sale changes who you pay, but it doesn’t change what you owe. The amount you owe, the balance, interest, and fees from the previous owner, all carry over to the new owner. This isn’t a new debt. Instead, the new owner replaces the one you were previously required to pay. You still have to pay the same outstanding amount, just to a different entity.
How a Debt Sale Affects Your Credit Report
When a debt is sold, your credit score won’t always be affected. But you’ll see a change on your credit report when one account gets replaced with another.
Once a sale completes, the original creditor usually stops reporting the account as an open balance, and you’ll eventually see that original creditor close that account on your credit report. The new company that owns your debt may report it under its own name, which could cause some confusion, and you should verify the debt, especially if it doesn’t look familiar.
Missed payments, charge-offs, and collection accounts can lower your credit scores while they remain on your credit report. A sale doesn’t make those marks last longer, since negative information generally stays on your credit report for up to seven years and is measured from the original missed payment, not a debt sale or transfer.
FAQs
Can a debt buyer verify my account?
The new company that oversees your debt can verify your account through your name, the creditor’s name, the account number, and an itemized amount, as well as copies of documents provided to you while the account was open, such as account statements.
How do I know my debt was sold?
You may not know your debt was sold until the new owner contacts you with a written validation notice that names the account, creditor, and amount of the debt.
Does selling a debt change what I owe?
No, a debt sale won’t change what you owe, but it will change who you owe it to. The balance, interest, fees, and original terms all carry over to the new owner.
Does a debt sale hurt my credit?
While the debt sale itself won’t change your credit score one way or another, the account status changes on your credit report. Missed payments and a collection account are negative marks that can lower scores while they appear, and a sale doesn’t restart the seven-year reporting period.
For more answers to common questions, visit our full FAQ page to explore additional details and guidance.
Next Steps
A debt sale changes who owns your account and who you work with to resolve it. It doesn’t change what you owe or your right to verify the debt. To get started, look up your account, give us a call at 800-296-2657, or chat with us.
