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Difference Between a Creditor and a Debt Collector?

Debt collectors and creditors both seek to collect debts from consumers, but there are significant differences between the two, especially when it comes to law.

akermonrosssenfeld
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Difference Between a Creditor and a Debt Collector?

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  1. What is the Difference Between a Creditor and a Debt Collector? Debt collectors and creditors both seek to collect debts from consumers, but there are significant differences between the two, especially when it comes to law. So what is the difference between them? According to Akermon rossenfeld, you are considered a creditor if you received goods or services before receiving payment in exchange for the promise that you would pay for those goods or services later, or if you owe a fine, an agency fee, court costs, or some type of tax to a governmental entity. You have an original contract or agreement to pay a creditor. In contrast, a debt collector may not have an agreement with you to pay and may never have done any business with you until contacted and asked to pay a debt. In certain cases, a debt collector is hired by the creditor on a contingency basis, which means he or she only gets paid if the debt is paid off. To collect the debt, it may charge hourly or flat rates, or it may simply purchase the debt for less than the amount owed, in the hope of recovering the full amount, thereby making a profit. It is common for debt collectors to identify who they are calling for, but if you do not recognize the company name as the one you have done business with or one to whom you owe a debt, you should ask for a copy of the original creditor's name, the amount of the debt, and any dates of service or contracts you signed to purchase goods or services as part of your debt collection process.

  2. What is the Difference Between a Creditor and a Debt Collector? According to Akermon rossenfeld, look at the letterhead of collection letters to see who they come from. Check for any indications that the letters are from a debt collector; such phrases may include original creditor, original account number, collection for, or collection on behalf of. Past due statements appearing on your credit statement, if they were established there by a debt collector, should contain the name of the actual creditor and may also contain phrases such as group account or ordering on behalf of.

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