Welcome to “Ask Stacy,” a short video that answers money questions submitted by readers and viewers. You can learn how to submit your own question below.
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Today’s question is about the debt; more specifically, if you can legally dodge a debt that has been sold to a collection agency.
This one is in my alley. My first book is called “Life or Debt” and I have served on the boards of two not-for-profit credit counseling agencies.
So, is a debt invalidated when sold to a collection agency? Watch the following video and find out.
For more on this topic, check out “9 Secrets Your Debt Collector Won’t Know” and “Ask Stacy: Where Can I Find Help With Credit Card Debt?” You can also go to the search at the top of this page, put the word “debt” and find a lot of information on just about anything related to that topic.
Finally, be sure to visit the “Debt Help” page of our Solution Center, where you can find free help for debt issues, as well as solutions for just about any debt problem. ‘money.
Do you have a question? Scroll down after transcription.
Don’t want to watch? Here is what I said in the video
Hello everyone and welcome to your daily money question and answer question. I’m your host, Stacy Johnson, and this question is brought to you by MoneyTalksNews.com, which has been providing the best personal finance news and advice since 1991.
Let us come to our question. This is from Lisa:
“I read an article that said if a creditor sells or assigns your account to a third party collection agency, they violate the original agreement, thereby rendering that debt null and void. Is it true?”
Just to make sure we’re all on the same page, let’s sum this up. Let’s say you have incurred a debt, but have not paid it. He’s turned over to a collection agency, and he goes after you. Lisa wants to know if she can tell the collection agency, “Hey, I didn’t agree with you, I had it with the original creditor. Therefore, I owe you nothing.
I hate to tell you, Lisa, but that’s not how it works.
The original creditor – such as a bank or credit card company – is authorized to sell debt to third-party collection agencies, and those collection agencies are legally authorized to sue you for payment.
I suspect Lisa got this idea from social media or some other online source where lies flourish. I have seen similar articles. But if you think about it, it’s crazy. The debt collection business has been around for a long time and it would not exist if this were true.
Obviously, showing collections is bad for your credit history, and you should do what you can to deal with it. But be careful.
There’s a clock that starts running when you don’t pay a bill, and selling debt to a collection agency doesn’t restart that clock. However, some debt collectors will try to trick you into restarting the clock by forcing you to do something like make a small payment. So, be very careful when dealing with these guys. We have lots of articles on what to do on MoneyTalksNews.com.
Another thing to know: If you are being harassed by a debt collector, consider hiring a lawyer. You can often get one for free, as a lawyer will prey on debt collectors who break the law, which many do. The lawyer will get his fees by prosecuting these collectors.
At the end of the line ? If you have debt problems, start reading. There is information on MoneyTalksNews.com, as well as many other sites.
Now is the time for our quote of the day. This one comes from legendary reggae star Bob Marley.
“If it takes money to be happy, your pursuit of happiness will never end.”
Have a profitable day. Find me here next time!
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The questions I’m most likely to answer are those that will interest other readers. In other words, don’t ask for super specific advice that only applies to you. And if I don’t answer your question, promise you won’t hate me. I’m doing my best, but I get a lot more questions than I have time to answer.
I founded Money Talks News in 1991. I am a CPA and have also obtained licenses in stocks, commodities, options capital, mutual funds, life insurance, the supervisor of securities and real estate.
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