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?"

  1. Do I still owe debt collectors for a debt that's past the statute of limitations ...

    Learn more about the statutes of limitations that govern certain personal debts and why you maintain obligations as a debtor ... Read Answer >>
  2. How can a creditor improve its Average Collection Period?

    Read about some of the ways that a business can improve its accounts receivable management practices to shorten its average ... Read Answer >>
Related Articles
  1. Personal Finance

    How the debt collection agency business works

    Understanding how the debt collection business works will give you a better chance of coming out ahead if you ever have to tangle with a collection agent.
  2. Personal Finance

    How To Beat Off A Zombie Debt Collector

    Sounds like a bad horror movie, but it really could happen to you. Here's how to identify zombie debt and send collectors back to the dead-debt graveyard.
  3. Personal Finance

    Outfox the Debt Collector's Hounds

    Dealing with a collection agency is scary if you don't know your rights. We help you take back the power.
  4. Financial Advisor

    How Collectibles Are Taxed

    The sale of collectibles can lead to a cash windfall, however, they are taxed pretty heavily because collectibles are not considered economic drivers.
  5. Personal Finance

    How To Manage And Consolidate Your Own Debt

    With debt management services costing a lot of money, this article looks at why it is better to manage your own financial liability.
  6. Insights

    The National Debt Explained

    We know it's growing, but we don't know exactly how. An in-depth look why the U.S. Government's debt continues to balloon and what it all means for you.
  7. Personal Finance

    Digging Out of Debt in 8 Steps

    The only way to get out of debt is to roll up your sleeves and start paying it off - one dollar at a time.
  8. Managing Wealth

    How To Reduce Your Debts Without Spending Unnecessarily

    While it is not possible to repay your debts without investing money into the process, you should avoid spending unnecessary sums of cash in the pursuit of a financially liberated future.
  9. Investing

    Will Corporate Debt Drag Your Stock Down?

    Corporate debt can mean a leg up for firms, or the boot for investors. How to tell the difference.
  1. Satisfaction and Release

    When a debt that is due under a court judgement has been paid ...
  2. Mini-Miranda Rights

    Mini-Miranda rights are a statement a debt collector must use ...
  3. Net Debt

    Net debt is a metric that shows a company's overall debt situation ...
  4. Unsecured Debt

    Unsecured debt is a loan not backed by an underlying asset or ...
  5. Long-Term Debt to Capitalization Ratio

    The long-term debt to capitalization ratio, calculated by dividing ...
  6. Debt Service

    Debt service is the cash that is required for a particular time ...
Trading Center