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.