What Does “Current Owner” Mean on a Collection Letter? What is a Current Owner?

Continuing our series on how to read a collection letter, we’ll answer the question: “What does “current owner” mean on a collection letter?”

If you have received a collection letter and are left asking yourself:

“Who is Midland Credit Management?”

“Who is Portfolio Recovery Associates?”

“Who is LVNV Funding?”

Or have some other company you’ve never heard of saying you owe them money—read on!

Who are these companies?

How could there be anything but the original lender involved here?

Understanding the players involved will help you make informed decisions. Today, we’ll review how to deal with a collection letter and how to know if you are dealing with a reputable company.

What is an Original Lender?

Before we jump into the current owner, let’s start from the beginning.

Often found near the top of a collection letter is a bit of general information. Among these can be your name, the original lender, the balance, the account number, and sometimes a reference or file number.

We’ll begin by looking at the original lender. The collection letter may also refer to the “creditor,” “lender,” or something similar. Simply put, this is the company that you owed money to. This is the financial institution that initially issued the credit card, loan, or line of credit.

Examples can include big banks such as Bank of America, Chase, or Discover, smaller local community banks and credit unions, and other lenders.

What is a Current Owner?

When someone falls behind on a debt, the account is considered “delinquent” or “in default.” A debt that has gone behind goes through a rather expected lifecycle of delinquent debt, which you can learn more about here.

A part of the lifecycle of delinquent debt will often lead to the account being sold to a debt buyer. These are companies that purchase an inventory of delinquent debt for less than the total amount owed across all of the accounts.

A lot less, according to the Federal Trade Commission.

Once they have purchased your debt, this debt buyer is now the owner of your account. Their goal is to collect as much as they can, on as many accounts as possible, to maximize their profit.

This company, the debt buyer who purchased your debt from the original creditor, is the “current owner” of the account.

They have received the rights to the debt and can now pursue collections. They can attempt to collect directly, or they too can hire a third-party collection agency to collect on the debt.

Are They Legitimate?

If ever you receive a letter from a company that is unfamiliar to you demanding money, pause!

There are tons of scams out there, and they love to target vulnerable individuals.

If you have had debt trouble in the past, your debt may have been sold to a debt buyer. If the information regarding the debt is familiar to you, and you had trouble in the past, take it seriously, but confirm their credibility before paying.

If you are not familiar with the debt, or if there is not enough to leave you confident that this is a legitimate company attempting to collect on a legitimate debt, you do have rights. You can research the company with a bit of online research. A bad BBB rating doesn’t mean they are illegitimate. It is a bit expected for their industry.

Note that some types of debts, such as personal loans and payday loans, do have a higher tendency to attract scam artists. If this is the type of debt that the supposed collector is trying to collect, be extra wary.

If you still aren’t convinced, consider disputing the validity of the debt. You can do this on your own or with the help of an experienced attorney like you can find at National Legal Center.

If you need help, we welcome you to reach out to our team to discuss how to deal with a collection letter and debt you may have. Our legal team and debt settlement attorneys can help you understand your rights and options so you can #standuptodebt once and for all.

Whether you are on your own or working with a debt settlement attorney, anyone dealing with debt should expect to see debt collection letters in their mailbox.

They come in all shapes and sizes. They’re full of scary language and fine print. Or, maybe they say they are on your side and want to be your friend. They may say the balance is due in full right away or that you must call their office to take advantage of some great offer. Sometimes they even have an entire second page of nothing but disclosures.

Today, we’ll focus on one of those disclosures, in particular.

Usually accompanying the first letter a company sends after acquiring an account is a disclosure that reads: “You have 30 days to dispute the validity of this debt.”

What does it mean?

What happens after 30 days?

Why are they giving that deadline?

What if you don’t do whatever it is they’re saying to do?

Today, all that and more.

This information is not just for clients enrolled in our Debt Resolution Legal Services but for anyone who needs to know how to read a debt collection letter. We hope to help you understand your rights as a person in debt so you can #standuptodebt, once and for all.

A Notice Of Your Rights

The first thing to know is that this is not a scare tactic.

People are sometimes concerned after reading this particular disclosure. They think that if they do not do this “thing,” they might be sued or face some other consequence.

The disclosure: “You have 30 days to dispute the validity of this debt.” is informing you of a right afforded to you under the Fair Debt Collections Practices Act (FDCPA). The wording of it may sound a bit doom-and-gloom because of that 30-day “deadline” that it seems to express. However, it is meant to help you!

Legal-Speak

According to the Federal Trade Commission, the particular provision of the FDCPA extending the right to dispute the validity of the debt is:

If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

Yes. That is quite a run-on sentence.

Real Talk

This disclosure explains that under the FDCPA, you have the right as a person in debt to essentially say “this is not mine”, “I don’t believe I owe this”, or “that balance is not correct.”

If you do that within 30 days from the date you receive the collection letter, the collector should stop collecting until they validate the debt. That means they are not supposed to call, email, send letters or pursue other means of collection until they have provided you—the debtor— with proof of the debt.

There is so much upside there. Validating a debt can be a very powerful tool for a person in debt, and one that debt settlement attorneys often use.

The Window Closes… Sort Of

Everything seems to center around this 30-day timeframe.

So, what happens after 30 days?

According to the Consumer Financial Protection Bureau, you can lose important rights if you do not act within the allotted time. Our experience shows that many reputable collection agencies and debt collectors will choose to stop collecting until they’ve provided validation of the debt, even if it is after the 30-day timeframe. However, as the CFPB points out, they are not likely under a legal obligation to do so.

It is always best to act within the timeframe specified under the FDCPA. However, if you do not believe the debt is valid, it may be worth disputing even if that window seems to have closed.

When To Send A Debt Validation Letter

The purpose of this provision of the FDCPA is to allow consumers to set the record straight. If you are receiving collection notices about a debt you don’t owe, this is your first chance to put it to rest. This right is not meant to get you out of debt that you legitimately owe.

Be mindful when disputing a debt though- it could work against you.

The particular details of your situation will determine whether or not you should consider disputing a debt. If you really do owe the debt, and you know you owe it, it may not be worth making the collector jump through the hoop of validating the debt.

Responding to their letter confirms a few things for them.

1. you are alive
2. they have the correct address
3. you are aware of the debt
4. the debt is bothering you

In addition to the information above, you have also essentially forced them to gather statements and other documentation that they may not have had to get. You’ve prompted them to put energy and expense into your debt.

Many of the documents needed to validate the debt also happen to be the same ones that assist a collector in filing a lawsuit to collect the debt.

So, again, be mindful.

What To Write In A Debt Validation Letter

The specific language one should use when writing a debt validation letter is specific to the details of the situation.

For example, our debt settlement attorneys may send one letter when a balance seems different from what the client believes they owe. A different letter might be sent for a client who believes the debt was not theirs at all.

The CFPB provides several sample letters that can be quite useful.

For more specific guidance, speak with one of our knowledgeable Case Analysts to see how our debt settlement attorneys can help you.

What Will I Receive In Return?

If you are taking the time to write a letter to a collector, you might expect some sort of response. Per the FDCPA, their only requirement is to stop collecting until they can validate the debt. Assuming this is within that 30-day window, of course.

In some instances, they will send a letter confirming receipt of your request for debt validation. Beyond that, they should top collecting or send what they believe is proof.

A full validation will likely include credit card statements, a signed contract, and other documents to the effect.

Sometimes, they will send a haphazard letter or explanation that claims the debt is valid without giving very much “proof.” In instances like this, our debt settlement attorneys will often engage them through several rounds of communication. They may explain why the validation did not meet legal standards and reassert that the debt has not been validated.

And sometimes, the collectors won’t respond at all.

They may genuinely cease collecting on the debt, conceding that they cannot prove that the debt is valid. In some instances, they may even send a letter confirming that they were unable to obtain appropriate documentation and that they are discontinuing the collection of the debt.

Well, What is a Debtor to Do?

As is so often the case, it depends.

Debt matters are so situational that attempting to provide a cookie-cutter response would be a disservice to you and a risk to your financial future.

Before sending a letter on your own:

1. Arm yourself with all the information you can.
2. Read more.
3. Review example letters.
4. Make sure you understand the specifics of your debt situation and how aggressive or consumer-friendly the collecting entity is.

All of this should weigh-in to help you decide whether or not to take action after reading that now not-so-scary disclosure- “You have 30 days to dispute the validity of this debt.”

While we hope that this information and the resources provided are helpful and maybe even actionable, we do not want you to take it as legal advice.

If you would like legal advice on your particular situation, our knowledgeable team is here and ready to help. Stand up to debt today! Complete this short form to request your debt relief consultation.