Should I Pay Debt Collectors or Original Creditor?

Sometimes it can be confusing to know if you should pay the debt collection agency or the original creditor because a debt changes hands so many times.

There are really three scenarios when a debt is unpaid and the consumer could be confused about who they are dealing with and who is getting paid.

  1. A creditor may have an in-house collection division. In this case, you are still in debt to the original creditor and that is who gets paid.
  2. Sometimes the creditor will hire a collection agency to chase the money for them. Ask the debt collector if they own the debt. If not, you still might be able to negotiate with the original creditor.
  3. Often the last straw, the original creditor might sell the debt to a collection agency. In this case, the debt collector owns the debt, so any payment is made to the collection agency.

Know Your Rights Under FDCPA

Problems between consumers and debt collection agencies have been around a long time. In 1978, Congress passed the Fair Debt Collection Practices Act (FDCPA) in an attempt to give consumers protection from abusive practices. The Federal Trade Commission (FTC), which oversees enforcement of the law along with CFPB, says debt collection tops the list of consumer complaints.

The FDCPA outlines debt collection guidelines:

  • Collection agencies must restrict phone calls to between 8 a.m. and 9 p.m. local time.
  • Debt collectors may not call you at work if you tell them that you are not allowed to receive calls.
  • You can stop calls from collection agencies by sending a certified letter asking them to stop calling.
  • Debt collectors must send you a written “validation notice” that states how much money you owe, the name of the creditor and how to proceed if you want to dispute the debt.
  • Debt collectors may not make threats of violence, use obscene language, make false claims to be attorneys or government representatives, misrepresent the amount of money owed, or claim that you are going to be arrested.
  • Debt collection agencies are only allowed to talk about your debt with you and your attorney. They can reach out to your friends and family in search of your contact information, but they can’t speak about your debt (with the exception of a spouse in some cases).

Even with all those restrictions and protections, the CFPB and state attorneys general receive thousands of complaints from consumers every month about debt collection practices. Most of the problems, deal with debt the consumers say is not owed and the fact collection agencies don’t accurately track details of the original contract from start to finish.

Statute of Limitations on Debt Collectors

The first thing consumers should do is verify that the debt even exists. In addition to the “validation notice” that debt collectors must send, there is a “statute of limitations” on most debts. The statute of limitations varies from state-to-state, from as little as three years to as many as 15. Most states fall in the range of 4-to-6 years.

If the statute of limitations on your debt has passed, it means the collection agency can’t get a court judgment against you. It does not mean they can’t still try to collect, though if you refuse to pay, they have no legal recourse against you. However, the unpaid debt remains on your credit report for seven years from the last time you made a payment on it.

Many of the problems start with the fact that debt collection agencies often buy debts from several sources and either collect the money or sell the debt a second, third, maybe even fourth time. Along the way, the original contract gets lost and specifics of how much was originally borrowed, at what interest rate, what late payment penalties are involved and how much is still owed, are lost with it.

Consumers need to keep accurate records of all transactions involved with their debt, especially the original contract, record of payments and any receipts. That information is used when filing a dispute letter with the collection agency.

Ways to Remove Collections from Credit Report

Still, there is a chance you could get the collection removed. A collection stays on your credit report for seven years from the time of your last payment, and there are three ways to get it taken off.

  1. Dispute the claim
    Your first option is to dispute the claim. This only works if you don’t owe the debt, or the collection agency fails to verify the debt within 30 days. Sometimes the collection agency keeps a debt on your credit report past seven years. In this case, you can write them with proof of when delinquency started to have it removed.
  2. Pay for a removal
    Even if you pay the collection agency and settle the debt, the collection stays on your credit report for seven years. You can try to negotiate with the collection agency to have the collection removed. You would pay a fee to the collection agency and they would stop reporting your collection, just make sure you have the agreement in writing.
  3. Goodwill Deletion
    If the debt was acquired in an unfortunate circumstance and the debt has been paid, the last option is to ask the collection agency or creditor to take the collection off your credit report out of goodwill. Maybe you had a medical emergency or a situation out of your control. If you have good credit (other than the collection) and were a reliable with payments before and after the delinquency, there is a chance they will take the collection off your credit report. Although, the chances are much higher with the original creditor and extremely low with a collection agency.

 Unfortunately, this is when the situation can become very complicated.

The problems consumers have had disputing information on credit reports has been the subject of several lawsuits and investigative journalism pieces, including one by 60 Minutes, the CBS news magazine. The situation got so hot that the three major credit reporting bureaus – Experian, TransUnion and Equifax – reached an agreement in 2015 with the New York State Attorney General to reform the process for correcting errors.

The reforms are supposed to promote fairness in the process for resolving credit reporting errors, including notifying the other credit bureaus when a dispute has been settled in favor of the consumer.

Can a Debt Collector Contact You If You Dispute Debt?

When you dispute a debt in writing, debt collectors can’t call or contact you until they provide verification of the debt in writing to you.

This essentially puts everything on hold until you receive verification, but you only have 30 days from when you first receive required information from a debt collector to dispute that debt. You can lose valuable rights if you don’t dispute it, in writing, within that 30 days.

What Not to Do

  • Don’t ignore debt collectors. Regardless if it is your debt or not, don’t ignore the calls or letters. Take the recommended steps to dispute the claim.
  • Don’t talk over the phone. It’s better to communicate through writing in order to keep a paper trail. If you do need to talk over the phone, record the conversation. You might need permission to record depending on what state you live in. Simply inform them of your intention to record. If they continue the conversation, that counts as permission.
  • Don’t try to hide money or assets. It’s not a good idea to hide money in a friend or family member’s account. In fact, it’s against the law and called fraudulent conveyance.
  • Don’t take their word for it. Debt collectors are notorious for trying to get their money by any means necessary, and that could include deception. If you need more time, you can always ask for a debt validation. That should have everything spelled out for you and give you some extra time to double check that the debt is correct.
  • However, it is unclear yet whether that process is working so there still could be problems with the information on your credit reports. Each time your debt is sold, if the buyer fails to collect, he could send the information under his company’s name to a reporting agency. Thus, the same debt could be listed under several company names at all three reporting agencies.
  • “That is why you should check your credit report from each agency every year,” Rheingold said. “If you find an error, send the reporting agency a dispute letter right away.”
  • Still, collection agencies do not give up easily. Consumers can be sued by a debt collector,and then fail to show up for the court date and thus have a judgment go against them. Some consumers try to represent themselves with predictable results.
  • If the debt collectors do win a court judgment, they can attempt to recoup their money, depending on what state the judgment was entered. If you try to appeal the case, it is wise to find a consumer advocate attorney to represent you. If you can’t afford it, go to the local Legal Aid Society and try to get legal representation.
  • “Ignoring the court date is the worst possible thing you can do,” Rheingold said. “The standard of proof is minimal in most cases so you can bet your life that whether you owed the debt or not, (debt collectors) will get a judgment against you if you don’t show up.” Losing can result in your wages being garnished by a creditor.

Best to Check Credit Reports Regularly

As Ira Rheingold pointed out above, most of the disputes you will have with debt collection agencies are the result of debts you don’t even know. Collection agencies are often relying on second-hand or even third-hand information that is unreliable and unverified.

If you check your credit report regularly, you may see a problem early and get it corrected before that debt even reaches a collection agency.

“If a judgment goes against you, find a lawyer,” Rheingold added. “If you do so within 30 days and your lawyer files a motion to reconsider, you have a chance to get it overturned. The crucial thing is to make sure the debt collector has the information necessary to bring the case to court. A lot of times, he is working off a line of data that says the amount owed, but with no real proof that you are the one who owes the debt.”

If you can’t find a way to stop the phone from ringing, consider call a nonprofit credit counseling agency like InCharge Debt Solutions. Their certified counselors are trained in dealing with credit problems and can steer you toward solutions.


Huffman, M. (2016, July 28) Debt collectors face tighter regulation by feds. Retrieved from

Dwyer, D. (2015, December 8) Don’t recognize that debt? Here’s what to do. Retrieved from

NA, (2016, March 29) CFPB Monthly Complaint Snapshot Examines Debt Collection Complaints. Retrieved from

NA, (2015, May 15) Debt Collection. Retrieved from

NA, ND. Can a debt collector garnish my bank account or my wages? Retrieved from