A:

If your debt is significantly delinquent – usually 90 days or more past due – your lender may decide to either assign or sell your debt to a third-party debt collection agency. Sometimes collection agencies sell entire portfolios of debt accounts to each other. If your debt is purchased by another debt collection agency, the date opened on the account is the date purchased from the original (or previous) creditor. In this sense, the previous account is written off by the selling creditor, and a new collection account is opened.

This does not mean that your delinquency is wiped clean, however. The original delinquency date – when you missed your last payment – must remain the same. It does not matter how many times the debt account changes hands. Your credit history is not altered, and the statute of limitations on credit reporting or on legal collection practices does not reset.

This does not mean that nothing has changed, however. If your debt is moving from an original lender to a third-party debt collector, this new creditor's collection efforts are regulated through the Fair Debt Collection Practices Act (FDCPA). The FDCPA is designed to protect you from unscrupulous or abusive debt collection techniques and generally only applies to third-party agencies.

Collectors cannot legally restart the clock on the statute of limitations (seven to 10 years, depending on the debt) through any re-aging techniques or through the sale to a different debt collector. The Federal Trade Commission has shut down the operations of collection agencies for attempts to re-age debts. For more on this topic, see "When Does the Statute of Limitations Clock Start on My Debts?"

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