subject: Credit Collectors and Debt Ownership [print this page] Credit Collectors and Debt Ownership Credit Collectors and Debt Ownership
Every creditor has their own in house procedures that they follow to collect their money when a debtor gets behind in his payments. Usually,they will first mail you late notices to which they have tacked on late fees. If you then still fail to pay what is owed, your debt may be sold to a credit collection agency. The original creditor then writes off the loan to you as a loss.
The concept of debt collection agencies is to make a profit on the difference between what they paid for the debt and how much of it they can get you to pay off. When your debt is sold to a collection agency, you will begin to get calls from them bugging you about repaying the debt. And you should not ignore these calls. But when you talk to them, the main thing that you will want to know from them is who owns the debt. This is because, even though many debts are sold to credit collection agencies, this is not always the case.
There are times when the originating creditor wants to retain his ownership of the debt but merely wants to use the resources of the particular collection agency to collect its money. This distinction is important, because if you want to negotiate to reduce the debt, the real owner of the debt is the one that can give you the greatest concessions.
There are times when knowing who the actual real owner of a debt can be crucial. A perfect example is in the case of a home mortgage. Currently, as the housing market is crashing around us, many banks have foreclosed on homeowners who failed to make their mortgage payments. Now, it was discovered that the banks do not really own the mortgages for many of these homes. And, now, some homeowners have begun to file suits against those very same banks.
Part of the problems stem from the fact that,many times, the original mortgage holder no longer owns the mortgage. It has been sold and passed around between so many institutions, that in many cases, no one really knows who owns the mortgage. What this means for you, that if someone tries to foreclose on you, and can't produce the ownership papers, you probably have the legal right to stay in your home. This is a situation where it is critically important to know who owns your debt.
In no way is this an endorsement of a person evading responsibility for paying his mortgage. But, it does illustrate that there are at least two sides to every transaction. And in many cases, it seems, either due to fraud or negligence, the banks have neglected their duty in establishing the necessary paper trails for all of the loans that they have made.
And this is the reason why any consumer who owes money and is being harassed by collection agencies, your very first question to them should be, "Who owns the debt." Then you can negotiate.
