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Should I pay the debt collector or the original creditor?

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In a Nutshell

If you have a debt that’s been sent to a debt collector, you may be wondering whether you should negotiate with the original creditor or the debt collector. In most cases, the original creditor will give you more generous terms for repayment than any debt collector will. Unfortunately, if it's already been sent to a collection agency, it's too late to make a deal with the original creditor. This article will explore the debt collection process, how to negotiate with an original creditor, and how to deal with a debt collection agency if your debt does get charged off and sent to collections.

Written by the Upsolve TeamLegally reviewed by Attorney Andrea Wimmer
Updated July 30, 2021

If you have a debt that’s been sent to a debt collector, you may be wondering whether you should negotiate with the original creditor or the debt collector. In most cases, the original creditor will give you more generous terms for repayment than any debt collector will. The original creditor will also be happy to recoup the debt that they extended to you, at least most of the time. Paying the original creditor can also help your credit score in many cases. Paying off the debt collector is usually a poor second choice.  

This article will explore the debt collection process, how to negotiate with an original creditor, and how to deal with a debt collection agency if your debt does get charged off and sent to collections.

Debt Collection Process

When you fall far enough behind in your monthly payments to a creditor, such as a student loan, car loan, or credit card company, the creditor will eventually charge-off your account and send it to collections. The debt collection company that takes over your account has purchased your debt from your original creditor, and their job is to collect as much of the original debt as possible. They bought the debt for pennies on the dollar, so if they collect the entire amount of the debt, they can make a big profit. 

In most cases, if the original creditor sees that you're falling behind on making payments, they will first try to collect on the debt by offering to reduce your monthly payment or lower your balance. If this doesn’t work and you fall far enough behind on making payments, your creditors may turn the delinquent account over to a debt collection company. At this point, the debt has been charged off and written off by the original creditor as a non-collectible debt.

You should take every measure possible to avoid having your accounts sent to a collection agency. This will hurt your credit score and can also result in constant phone calls, daily correspondence, and other stressful collections efforts. Also, letting a debt go to collections will be recorded in your credit history and remain on your credit report for the next seven years. The credit bureaus — TransUnion, Experian, and Equifax — take this matter very seriously. If you fall behind on debt payments but can pay off your debt before it goes to collections, pull a free copy of your credit report to ensure that it has not been reported as a charge-off. 

Original Creditor vs. Debt Collector

Most lenders prefer to communicate with their borrowers to try and make good on their debts rather than turning delinquent accounts over to a debt collection agency. The original lender wants to keep its customers, and this is good for you because they often have more discretion and flexibility to negotiate than a debt collection agency does. They may even contact you to see whether you can make any type of payment on their debt to stop it from going to collections.

Debt collection agencies specialize in trying to collect uncollectible debts. Since your original lender sees you as a customer, they are willing to work with you. But debt collection agencies are motivated purely to recoup the unpaid debt. While the majority of the debt has been written off by the original creditor, a debt collection agency is trying to reclaim this amount as profit. Paying the full amount of the debt results in a large commission for the debt collector but does little to help your credit report or credit score. One potential upside is that the debt collection company may be willing to waive late fees, over-limit fees, and other fees in order to collect the full amount of the debt. 

A debt collector may use any number of unethical strategies to get you to make at least one payment on your delinquent debt. For this reason, it is important to make sure that you understand your rights under the current debt collection laws. The Fair Debt Collection Practices Act (FDCPA) prohibits many types of abuse by debt collectors trying to collect their debts within a reasonable period of time. Debt collectors cannot call you before 8 a.m. or after 9 p.m. local time. They cannot use obscene, abusive, or foul language when they talk to you or threaten to repossess all of your personal property or business assets. But they can garnish your wages in some cases. 

How to Find Out if Your Debt Has Been Sent to Collections

In most cases, if you are only two or three months behind on your debt, your original creditor probably still has your account. After this time, the account is in danger of being turned over to a debt collector. Typically, you will receive a prior written warning informing you that your account is about to be turned over to a debt collection agency. You can contact your original lender to see whether your debt has been turned over to a debt collection agency. Once this happens, the rules for communicating directly with your original lender change drastically. 

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How to Negotiate With the Original Creditor

If you want to try to negotiate with your original creditor but your debt has been turned over to a collection agency, start by contacting the agency. Ask them to give you the contact information for your original creditor’s collection department. Then, you can call them to negotiate with them directly. In most cases, the original creditor will only take your account back if you have made a repayment plan with the debt collector and have made at least two or three on-time payments with them already. 

If you’ve had an account sent to a debt collection agency, consider seeking legal advice about how to proceed from here. A qualified attorney can advise you on the best way to proceed, whether it be by contacting the original creditor or negotiating with the debt collection agency. 

Know Your Financial Ability

It is important to figure out how much you can pay on your debt before you try to negotiate a payment plan. This way, you won’t end up making any false promises and you can also stay within your budget. If you are negotiating with the original creditor, you should know that they will always favor a lump-sum settlement over a series of payments because the lump sum is guaranteed. If the debt is at least nine months old, then the creditor will most likely accept less than the full amount, but you’ll have to negotiate this settlement. 

Make Sure That the Creditor Still Owns the Debt

Before you make settlement arrangements of any kind with your original creditor, take the time to verify that your original creditor still owns the debt. Your negotiation efforts will be wasted if your creditor has passed ownership of the debt on to a debt collector or debt collection agency. Once that happens, your original creditor no longer has an interest in the debt and will simply refer you to the collection agency. If you send a written notice to your creditor asking them whether they still own the debt, be sure to send it via certified mail so that you have proof that they received your request. The same goes for a dispute letter. 

Negotiate a Payment Plan

If possible, negotiate either a lump-sum payment or a series of payments with your original creditor. This is better than having your account charged off to collections because it won’t hurt your credit score as much and will probably result in better repayment terms than any debt collector or debt collection agency will offer. Remember that you can also ask the creditor to remove negative information from your credit report once you come to a repayment agreement.

Get It in Writing

Before you embark on any type of repayment plan, whether it be with your original creditor or a debt collection agency, be sure to get the terms of the repayment agreement in writing so that you have tangible proof of what they said at the outset. The original creditor should also provide a written notice that it still owns the original debt. This can prevent any secondary creditors from claiming that they now own the debt. 

How to Deal with Debt Collectors

Debt collectors must follow the rules established by the Fair Debt Collection Practices Act (FDCPA). The FDCPA covers several different types of debts, including credit cards, student loans, and medical debts. But it does not apply to back taxes or unpaid child support. It is important to know your rights under this federal law. Although you’re still responsible for paying your debt, this act does give you some legal rights and allows you to take legal action if those rights are violated. 

As mentioned previously, debt collectors cannot threaten you in any way, including physical violence, intimidation, or any other form of bullying. They can only state the facts and the legal consequences of not paying your debt. They cannot threaten to seize your bank account or other property. Debt collectors are also required to provide you with certain information, such as the name of the original creditor. And they cannot force you to pay old debts that are now past the statute of limitations. 

Because debt collection laws vary by state, you’ll need to familiarize yourself with the debt collection laws in your state. It may have additional restrictions on debt collectors’ ability to contact debtors and what they can say to them. Contact the Consumer Financial Protection Bureau (CFPB) or Federal Trade Commission (FTC) if you think that you have been treated unfairly by creditors. It may also be wise to enlist the help of a credit counseling service to deal with creditors if you don’t feel able to do this yourself. 

Let’s Summarize...

It’s always better to keep a debt with the original collector than to let it go to a debt collector or debt collection agency. Letting a debt go to collections will hurt your FICO credit score and show up as a blemish on your credit history. Most original creditors do not want to turn their delinquent debts over to a collections agency because it means the loss of a current and possible future customer. Because of this, they are often willing to work with you if you are falling behind in your payments. But, you’ll need to contact them as soon as possible. After a few months of nonpayment, you’ll risk having your account sent to collections.

Most debt collection agencies are motivated by profit. They will make efforts to contact you to try to get as much money out of you as they can. In most cases, this money just goes to the debt collector. If your debt goes to a collection agency, you may be on the hook to pay it, but you cannot be harassed by a collector. Know your rights under the law.

Written By:

The Upsolve Team

Upsolve is fortunate to have a remarkable team of bankruptcy attorneys, as well as finance and consumer rights professionals, as contributing writers to help us keep our content up to date, informative, and helpful to everyone.

Attorney Andrea Wimmer


Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled... read more about Attorney Andrea Wimmer

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