Lender
Original Creditor
Original creditor summary:
An original creditor is a company that gives a consumer a loan or line of credit.
It's common for original creditors to use their own collection department or a collection agency to get repaid.
The Fair Debt Collection Practices Act generally does not apply to original creditors that try to recoup their own debts.
Original Creditor Definition and Meaning
An original creditor is a lender that advances money or to you. If you fall behind on a debt, your original creditor might use a collection agency to get repaid. An original creditor might also sell your debt to a buyer. The Fair Debt Collection Practices Act generally does not apply to original creditors, but rather, debt collection companies.
Types of Original Creditors
An original creditor is any company that loans you money in some shape or form. Original creditors can include:
Mortgage lenders
Auto loan lenders
Personal loan lenders
HELOC lenders
Credit card issuers
Stores, auto dealers, builders and others that advance credit in order to make a sale.
Comprehensive Breakdown of Original Creditors
An original creditor is any individual or company that extends a loan or line of credit. If you apply for a personal loan and receive funds from your local bank, for instance, that bank becomes your original creditor because you owe it that debt.
If you fall behind on a loan or credit card payments, your original creditors will probably contact you to get repaid. But eventually, an original creditor may turn your debt over to a collection agency to recoup the money. Or, it might choose to sell your debt to a buyer, transferring the right to collect your debt. At this point, you'll usually have to repay the collection agency or debt buyer, rather than your original creditor. A debt settlement company typically works with both original creditors and collection agencies to negotiate debts.
If you've ever had your debt turned over to a collection agency, you may have experienced frequent calls or messages trying to get you to pay. There are certain rules debt collectors have to follow under the Fair Debt Collection Practices Act (FDCPA). For example, they have to stop contacting you if you ask them to. However, the FDCPA does not apply to original creditors. In some states, though, original creditors must abide by laws that are similar to the FDCPA. And sometimes, an original creditor trying to collect a debt using a different business name may be subject to the FDCPA.
Original Creditor FAQs
What is the difference between an original creditor and a credit card debt buyer?
The original creditor is the individual or company you borrow money from, like your bank or credit card company. Original creditors typically try to contact you for several months once you start missing payments. If unsuccessful, they may take you to court, send your account to a collection agency, or sell your account at a discount to a debt buyer.
Debt buyers purchase past-due accounts and get to keep whatever they can collect from you.
Collection agencies can be hired to collect past due accounts for original creditors, or they may function as debt buyers.
Who does Freedom Debt Relief negotiate with to settle my debts?
We may negotiate, directly or through a representative, with a variety of different entities to settle your debts. These entities include the original creditor, a subsequent creditor, or any other entity that may hold a debt, including any of their agents, attorneys, or third-party collectors. The term "creditor" means any and all such entities with which we may negotiate, directly or through our representative, a settlement of your debts. Notwithstanding the foregoing, we make no representation about our ability to negotiate with any specific creditor entity and make no representation about whether any specific creditor entity will negotiate directly with us.
Can debt relief programs stop unwanted bill collector calls?
If you or a debt settlement company working for you negotiates a settlement with your creditor or debt collector, the calls should stop. However, debt settlement companies cannot guarantee that all collection calls will stop.
The FDCPA regulates collection agencies and many debt buyers. All you have to do to stop calls from these people is to write a cease-and-desist letter and send it to them. If they ignore the letter, you probably have the right to sue them.
However, the FDCPA does not apply to original creditors like your bank or credit card company. If you’re getting calls from the collection department of an original creditor, you can write them a cease-and-desist letter, and they might agree to stop contact. Some states like California have laws like the FDCPA that cover original creditors. But without a state law protecting you, original creditors can be much more aggressive than debt collectors.
Still, they can’t call any time they want, and they cannot be abusive. Laws that cover abuse by original creditors include the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, as well as other federal and state Unfair or Deceptive Practices Acts.
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