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Can I deal with the original creditor instead of the collection agencies? – Theresa

Written by Consumer

I have 3-4 collectin accounts, however, my undfestanding is according to fair credit act, i am not required to negotiate with them but can send a cease and desist letter and work directly with original creditor , but all the debt management companies i talk to tell me it isn’ t possible.

That if the original creditor has turned over to collection, i mist work with them. Do you know if this is true or not before i try to negotiage with original creditot?

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This is information that was submitted by a third party and not generated by or Steve Rhode.

1 Comment

  • Hi Theresa,

    Here is the rub:
    Creditors assign debts to collectors in the normal course of business. If your debts are simply assigned and not sold, the assignee collector has a contract with your original creditor. These assignment contracts typically last 60 to 90 days. If you call your original lender and try to reach a bargain while they have an assignment out to a collection agency you will typically be told who the debt is placed with and the contact information for that agency.
    There is a fair debt collection practices act that provides you the ability to send a cease communication letter to a collection firm. If an assignee of one of your creditors receives one of these from you, it is true that they will generally kick the account back to the creditor.
    Is that really what you want though?

    Here is why I ask:
    1. In some instances reaching a settlement with a 3rd party assignee collection firm who represents your creditor will yield a better savings and/or longer payment term options than will be available from the creditor directly.

    2. In some instances an assignee collection company who represents your creditor will kick the account back to your lender with notice of the cease communication letter and the creditor may immediately send the account to a local collection law firm for collection efforts directly after. This could mean you face more aggressive collection actions taken including court actions in order to get you to pay.

    3. In some instances reaching a settlement with a the third party collection agency who represents your creditor today will yield a better savings than will be available from the next agency the account is placed with. A good example would be an AMEX account placed with Nationwide can, in my experience, be settled at a lower rate and better savings than an AMEX account placed with Zwicker.

    If an account has been charged off and sold to a debt purchaser you will no longer be able to attempt to make arrangements with your original creditor.

    You can certainly contact your creditors and find out the disposition on your accounts. There have been instances where recovery personnel have been able to yank accounts back from assignees prematurely and offer to work with you. I have also seen instances where recovery department employees at banks have told consumers when the debt will come back to them after the 60/90 day contract with the collector expires and had the consumer call back after that day to work out a payment arrangement/settlement.

    Depending on who the creditor is, who the account is currently placed with, how long delinquent, your ability to fund settlements quickly or whether you need a balance reduction and longer payment terms, you may want to tackle some of the debts with the agencies rather than the creditors.

    I have some questions:
    Who are the original creditors?
    What is the balance owed on each account?
    How past due are payments for each account?
    Who is collecting on each account?
    Who are the debt management companies that have told you that you must work with them?
    What state do you live in?

    If you can answer these questions in a comment reply you will get some helpful tips and feedback.

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