Can a Debt Collector Sell My Debt If I’ve Started Repaying It?

Published

April 18, 2023

Nick Jarman is the owner of RightAway, LLC, which provides coaching services focused on getting individuals from where they are to where they need to be. In addition to leadership development and coaching, Nick provides consulting services to the credit and collection industry with a focus on first and third party debt collectors, debt purchasers, and vendors. He has two decades of experience encompassing all facets of credit and collection operations including performance, compliance, business development, training, IT, analytics, and client experience. He served the last three years on the Board of Directors for ACA International and is the past President of the Missouri Collectors Association. He is adamant about leading by example and ensuring that every process is done the “right way.”

A Credit.com reader Kierra recently wrote in with a question about a debt she was trying to pay off:

I owed an energy company $580. I settled with their collection agency for $480 as long as I paid $50 down and then $215 a month for two months. I made my down payment and called back a month later to make my second payment and I was that they sold my account to another collector and that my agreement with the previous collector was now void. Can they do that? After I already began to make payments?

To clarify, it is important to distinguish between a debt collector and a debt buyer/seller. Debt collectors do not purchase debt; they only collect on it. It is also important to recognize that not all originating creditors and lenders sell unpaid debt. For those that do, and as it relates to if a debt can be sold if a consumer has started repaying it, the answer is yes. An unpaid debt can technically be sold at any time, regardless of whether the consumer is in the process of repaying. Although it is much less likely that an account that a consumer is repaying would be sold, it could happen.

Unfortunately from a consumer’s standpoint, there is nothing definitively that can be done to ensure a debt is not resold. The reality is that the longer a debt goes unpaid, the more likely the debt will be resold. So whether the debt is with the original creditor or new debt purchaser, it is critical for the consumer to establish contact with them and work out a repayment plan on their unpaid debt. As indicated, if there is one way to help prevent a debt from being resold to another entity, it is to be in the process of repaying it.

The most difficult part in the debt purchasing and selling process is for consumers to know whom they owe. Oftentimes debts may be sold and resold, thus leaving consumers confused as to whom to contact when they are ready to repay their unpaid debt. The best way to track down your debts is to pull your credit reports (you can get your credit reports for free once a year). And it may soon be easier for consumers to get clarity about debt ownership. This past year, Florida passed regulations requiring a new owner of a purchased unpaid debt account to notify the consumer in writing of the change of ownership before beginning collection activity.

If you have a debt in collections, your credit score is most likely taking a hit. You can see how unpaid debts are affecting your credit scores for free on Credit.com.