Original Creditors vs. Debt Collectors

While there is no practical difference between "junk debt buyers" and "debt collectors," "original creditors" are different both in what they do and the way the law treats them. 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.

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. 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 sue you or sell the debt to another company. Whatever they do directly to you, however, they must worry about their reputation in the community, and harsh collections might reduce their sales.

Debt Collectors

Debt collectors, by contrast, lack that relationship with the consumer. Their only client is the creditor company or, if they have purchased the debt for themselves, their only loyalty is to their own bottom line.

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. You have to do all the same things to defend yourself, from answering the petition to showing up in court, responding to discovery, and going to trial if necessary. You'd do all the same things whether the person suing you is the original creditor or a debt collector. But there are important differences.

If the original creditor suing you, the business 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.

Original creditors are in business to do their business, and they are not really designed to chase debt defendants. They don't do it as efficiently as debt collectors--they typically hire their lawyers by the case, which is much more expensive than hiring lawyers to work on portfolios of loans.

Original creditors don't like to sue you. Once they file suit, original creditors are much less likely just to walk away from the suit if you put up a struggle, 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.