Creditors vs. Debt Collectors: What’s the Difference?
When you’ve had previous dealings with debt collectors, nothing makes your heart sink faster than a phone call from an unrecognized 800 number. Collectors and creditors can be extremely aggressive when trying to secure late payments, but before you assert your rights and try to get the situation under control, it’s important to know who you’re dealing with.
Who Is Your Initial Lender?
Anyone who is owed money is a creditor. The term “creditor” isn’t reserved for people collecting late or skipped payments. The company that administers your credit card is a creditor, and so is the company that owns your mortgage. If a friend lends you $20, they are one of your creditors. In most cases, the original owner of a debt is just a regular creditor — not a debt collector.
When Debt Collectors Enter the Picture
Original creditors typically try to hold onto debts that are profitable to them, which includes accounts with a long history of on-time payments. However, once it becomes clear that payments are likely to be erratic or consistently late, the debt becomes a serious liability for the financial institution.
To get rid of an account that is considered a liability, conventional banks, financial institutions, and other lenders may sell it to a debt collector. A Debt Collector is a Third Party collections agency, not the original creditor. Debt collectors buy delinquent accounts for less than the original debt is worth. They utilize a variety of aggressive collection techniques to get borrowers to pay up.
What Your Rights Are
The actions of a debt collector are governed by the FDCPA, the Fair Debt Collection Practices Act. Under the FDCPA, debt collectors and collection attorneys must adhere to strict regulations when attempting to collect payments. The FDCPA prevents debt collectors from calling excessively or at odd hours of the day, threatening legal action if they do not plan on taking legal action, and threatening borrowers with arrest. However, the FDCPA is designed to protect consumers from debt collectors — original creditors are not bound by the FDCPA.
Constant debt collection calls can be an enormous source of stress, particularly if you have no way to make your accounts current or make consistent payments. If you suspect that collection agencies are using illegal methods to intimidate you into paying, it’s important to assert your rights with the help of an attorney.
If your debt has spiraled out of control, you need to consider your options and find a way to get collection calls under control. Learn more about bankruptcy and other options by contacting Lucid Law at 908-738-8277 to schedule your consultation in one of our convenient New Jersey locations: 3640 Valley Rd, 2nd Fl, Liberty Corner NJ 07938; 510 Thornall Rd., Suite 270, Edison, NJ 08837; or 52 Maple Ave, Morristown, NJ 07960. Our New Jersey bankruptcy law offices are conveniently located in Somerset, Middlesex and Morris counties.