Ask Stacy: If My Debt Is Sold to a Collection Agency, Do I Still Have to Pay It?

Debt collector
Photo by Iakov Filimonov / Shutterstock.com

Welcome to “Ask Stacy,” a short video feature answering money questions submitted by readers and viewers. You can learn how to send in a question of your own below.

If you’re not typically a video watcher, give it a try. These videos are short and painless, and you’ll learn something valuable. But if you can’t deal with video, no problem: Just scroll down this page for the full transcript of the video, as well as some reader resources.

Today’s question is about debt; specifically, whether you can legally dodge a debt that’s been sold to a collection agency.

This one is right up my alley. My first book is called “Life or Debt,” and I’ve served on the boards of two nonprofit credit-counseling agencies.

So, is a debt invalidated when it’s sold to a collection agency? Watch the following video and find out.

For more information on this topic, check out “9 Secrets Your Debt Collector Doesn’t Want You to Know” and “Ask Stacy: Where Can I Find Help With Credit Card Debt?” You can also go to the search at the top of this page, put in the word “debt” and find plenty of information on just about everything relating to this topic.

Finally, be sure and visit the “Debt Help” page of our Solutions Center, where you can find free help with debt problems, as well as solutions for just about any money issue.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hello, everyone, and welcome to your money Q&A question of the day. I’m your host, Stacy Johnson, and this question is brought to you by MoneyTalksNews.com, serving up the best in personal finance news and advice since 1991.

Let’s get to our question. It is from Lisa:

“I read an article that stated if a creditor sells or turns over your account to a third party collection agency they breech the original agreement, thus making that debt null and void. Is this true?”

Just to make sure we’re all on the same page, let’s boil this down. Let’s say you incurred a debt, but you didn’t pay it. It’s turned over to a collection agency, and it’s coming after you. Lisa wants to know if she can tell the collection agency, “Hey, I didn’t have a deal with you, I had it with the original creditor. Therefore, I don’t owe you anything.”

I hate to break it to you, Lisa, but that ain’t the way it works.

The original creditor — say a bank or credit card company — is allowed to sell debts to third-party collection agencies, and those collection agencies are legally allowed to come after you for payment.

I suspect Lisa got this idea from social media or some other source online where falsehoods flourish. I’ve seen similar articles. But if you think about it, that’s crazy. The debt-collection business has been around a long time, and it wouldn’t exist if this were true.

Obviously, it’s bad for your credit history to show collections, and you should do what you can to deal with them. But be cautious.

There’s a clock that begins running when you don’t pay a bill, and selling a debt to a collection agency doesn’t restart that clock. However, some debt collectors will attempt to trick you into restarting the clock by getting you to do something like making a small payment. So, be really careful when you’re dealing with these guys. We’ve got lots of articles about what to do on MoneyTalksNews.com.

Something else to know: If you’re getting harassed by a debt collector, think about getting a lawyer. You can often get one free, because a lawyer will go after debt collectors that are breaking the law, which many do. The lawyer will get his or her fee from pursuing these collectors.

Bottom line? If you’ve got debt problems, start reading. There’s info at MoneyTalksNews.com, as well as lots of other sites.

Now it’s time for our quote of the day. This one comes to us from legendary reggae star Bob Marley.

“If it takes money to be happy, your search for happiness will never end.”

Have a profitable day. Meet me right here next time!

Got a question you’d like answered?

You can ask a question simply by hitting “reply” to our email newsletter, just as you would any email in your inbox. If you’re not subscribed, fix that right now by clicking here. It’s free, only takes a few seconds, and will get you valuable information every day!

The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

Got any words of wisdom you can offer on today’s question? Share your knowledge and experiences on our Facebook page. And if you find this information useful, please share it!

Got more money questions? Browse lots more Ask Stacy answers here.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Read Next
11 Secret Uses for Everyday Items That Will Save You Money
11 Secret Uses for Everyday Items That Will Save You Money

These are simple solutions for life’s irritations.

11 Signs That You Chose the Wrong Place to Retire
11 Signs That You Chose the Wrong Place to Retire

Health and happiness in retirement rely on some key factors.

5 Common Medical Expenses That Medicare Won’t Pay For
5 Common Medical Expenses That Medicare Won’t Pay For

Don’t let these health care costs catch you off guard in retirement.

9 Free Things That Used to Cost Us Money
9 Free Things That Used to Cost Us Money

Not everything is getting more expensive.

7 Reasons You Should Not Claim Social Security Early
7 Reasons You Should Not Claim Social Security Early

The sooner you claim your Social Security retirement benefits, the more you — and perhaps also your spouse — stand to lose. Here are the stakes.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
Will I Get My Ex-Husband’s Social Security When He Dies?
Will I Get My Ex-Husband’s Social Security When He Dies?

Two factors determine how much money is coming to you.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

22 Things You Should Always Buy at a Dollar Store
22 Things You Should Always Buy at a Dollar Store

The dollar store has great bargains on these purchases.

5 Household Disinfectants That Can Destroy the Coronavirus
5 Household Disinfectants That Can Destroy the Coronavirus

You likely already have some of these products at home.

6 Reasons I Will Never Trust Suze Orman
6 Reasons I Will Never Trust Suze Orman

Beware: The self-proclaimed personal finance expert has a track record that suggests more sizzle than steak.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You probably don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

16 Amazon Purchases That We Are Loving Right Now
16 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

America’s Most Reliable Appliance Brand Is a Surprise
America’s Most Reliable Appliance Brand Is a Surprise

Have you heard of this appliance manufacturer?

This Type of Social Security Benefit Is Often Overlooked
This Type of Social Security Benefit Is Often Overlooked

The Social Security Administration is not helping certain people get money to which they are entitled, a report says.

Getting These 2 Shots Could Reduce Your Risk of Dementia
Getting These 2 Shots Could Reduce Your Risk of Dementia

These vaccines may lower the risk of Alzheimer’s disease by up to 40%.

9 Everyday Problems You Can Solve With Vaseline
9 Everyday Problems You Can Solve With Vaseline

Forget expensive specialty products. Good ol’ petroleum jelly can address many common annoyances.

19 Purchases That Buyers Almost Always Regret
19 Purchases That Buyers Almost Always Regret

Think twice before buying these things.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

8 of the Worst Things to Buy at a Dollar Store
8 of the Worst Things to Buy at a Dollar Store

Not everything sold at dollar stores is a great bargain or a safe purchase. Here’s our list of products to avoid.

41 Things You Should Never Buy
41 Things You Should Never Buy

Some purchases are just plain dumb. Give yourself — and your budget — a break. Don’t spend money on this stuff.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

13 Brilliant Bulk-Buy Items on Amazon
13 Brilliant Bulk-Buy Items on Amazon

Every household should have these products on hand. Buying them in bulk on Amazon saves you cash.

8 Award-Winning Products That Impressed 40,000 Shoppers
8 Award-Winning Products That Impressed 40,000 Shoppers

The Product of the Year awards help shoppers find the best pet products, personal care items and everything in between.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.