Quick Answer: When debt is sold to a collection agency, only one account should appear on credit reports – the original creditor’s account should show a zero balance or be removed entirely. Reporting the same $1,000 debt twice creates an inflated $2,000 total that violates fair credit reporting practices and should be disputed with credit bureaus.
Question:
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Query about the question a reader sent to you that I read and that you answered
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Clarification, please, if a credit card debt is SOLD by a creditor not put into the hands of a debt collection agency to COLLECT the debt on their behalf.
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I note the answer you gave to this questioner. It reads as follows “Have settlement letter from collection company and complete the last payment in Oct.
The original creditor shows the remaining balance of debt and reduces it with each payment to the collection company. The collection company is also making monthly reports that I have the debt but no balance. Is it legal for the original company (R.C.Willy to report the debt balance each month to the 3 bureaus and their collection company to report that I have a collection to the three bureaus? I.E., the collection company does not state that the debt is with R.C. Willy ?”
My question for clarification is, what if the original Creditor SELLS the debt to a debt agency rather than employing a debt collection agency to collect payments for the original creditor? Would it be correct to show both accounts as being owed on a credit report, i.e., if an account is SOLD that has a debt, for example of $1,000.00 why would both accounts show on credit report showing total debt of $2,000.00 as surely the creditor who SOLD the account should have the account they SOLD removed and the company who bought the debt should have their purchase of the debt showing on the credit report Thank you
Dennis.
Answer:
Dear Dennis,
The original creditor should no longer report a balance due since they no longer owe the debt.
That would be an item to dispute with the credit reporting agency that lists that incorrect data.
To be clear, the creditor that sold the account would not have the account history removed but the balance owed to them corrected.
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