Original Creditors” and “Debt Buyers

“Original Creditors” and “Debt Buyers”

While there is no practical difference between “debt buyers” and “debt collectors,” “original creditors” are a different story altogether. Original creditors are the business that originally generated the debt by extending you credit in some way. Because they have a direct relationship to the purchaser, the law treats them very differently than it does debt collectors.

How Debt Arises

Debt can arise in a number of ways. If you buy a club membership, for example, and then stop paying on it, the club is the original creditor (having extended you “credit” for the monthly dues). If you stop paying, the club will bug you for a while, and then they may send the account to a debt collector to bug you some more. Eventually, they may sell the debt to another company.

Debt Collectors

If a company deals substantially with debts generated by another person or company, it is a “debt collector” legally, whether it is a debt buyer or otherwise.

Defending against Original Creditors or Debt Collectors

Defending yourself against original creditors is not more difficult than against debt collectors, and the legal process itself is basically the same. Defending yourself means answering the petition, showing up in court, responding to discovery, and looking out for yourself. You’d do all the same things whether the person suing you is the original creditor or a debt collector. But there are real-world differences.

If it is an original creditor suing you, that means that records will not have changed hands, and that of course dramatically increases the chance that they still have them, although some companies routinely destroy old records. Also, you have some legal rights against debt collectors (under the Fair Debt Collection Practices Act) that you don’t have against the original creditors. So in general your chances of winning are less against the original creditors. But it can still make sense to fight the case.

There are some slightly different reasons for this as opposed to when you are dealing with debt collectors.

Original creditors are in business to do…their business. That means they are not really designed to chase debt defendants, and they don’t do it as efficiently as debt collectors. Plus, they don’t like to do it (in general) and it damages their reputation in the community.

In my experience, original creditors take things a little more personally and are not happy about suing you. Having filed suit, original creditors are much less likely just to walk away from the suit, but on the other hand, if you fight, you delay them and force them to spend money they hate to spend. You force them to divert their time and money away from their basic business, and they worry about the impression made on potential customers. Thus, by fighting you may very well cause them to settle with you on much better terms.

So in conclusion, the materials you would use to fight debt collectors will still apply to your situation. They will give you the chance to probe the plaintiff to make sure they are willing to pursue you (sometimes they just drop the case if you fight), and they will increase your chance of getting a better settlement or of delaying the final outcome. But your chances of actually walking away from the debt are somewhat less when you’re dealing with the original creditor.