Can an Original Creditor Show a Balance if an Account Is Sold?

Two different companies cannot show separate balances for the same original debt.

Although, for the most part, two different companies cannot show separate balances for the same original debt, a limited exception to this principle does occur. However, this practice is less common than outright account sales to third-party collector companies.

Partial Balance

While an original creditor can sell debts to a third-party creditor organization in entirety, the original creditor does not always do so. In some instances, the original debtor retains a portion of the debt. In such a case, the original debtor can show a pro-rated balance pertinent to the portion of the account the company retains.

Full Balance

More commonly, original creditors sell full debtor accounts to third-party companies, usually for pennies on the dollar at a rate of between 1 percent to 5 percent of the account's total balance. With full-account sell-off, the initial account-holder cannot legally show a balance.

Creditor Status

With full-account sell-offs, the purchaser of the account becomes the creditor. One implication of this status is that the debtor falls under a prohibition against making any negotiations with the original account-holder company.

References

• Bills.com: Chargeoff and Credit Rating Fix
• Cardreport: Collection Agency FAQ