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One thing that is challenging to understand is what it means when a debt is sold to a third-party collections agency, does this not mean that the debt has then been paid to the original lender?
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Yes, and the debt is transferred to the new owner.
receivables are assigned, not sold to a third party collection agency. The company then Writes off the amount assigned to the collection agency to their bad debt ledger. No money is is exchanged until the collection agency receives any payments from the debtors.
Any monies collected are split per the assignment agreement with the collection agency. The bad debt is reported to the three major credit companies after a certain time frame if not paid, which lowers your credit score.
Is seven years they report the debt for.
Thanks for that explanation, that sort of makes sense.
Never wanted a credit score, don’t know how that is a thing.
Technically based on Bill’s explanation if that is accurate would mean this answer is no, the debt has not been paid, but the “receivables” are transferred to a different company/department for collections.
Makes sense if the debt is secured with something of value like a car that can be re-possessed by a bank, but a lot of credit debt is unsecured based on nothing at all and the banks never even had the money they pretend to lend out in the first place.