Why do creditors sell debts?
Most creditors specialise in lending money and collecting it. They don’t specialise in chasing debts which are in arrears, and trying to find people who are not paying. Instead they usually employ the services of debt collectors or sell the debt on to debt purchasers.
Debts regulated by the Consumer Credit Act, can be sold on or placed with another company any time after you stop paying.
This applies to most common types of consumer debt such as a loan, overdrafts, credit and store cards, hire purchase and catalogues.
If a creditor is finding it difficult to collect a debt, they might pay a company which specialises in this to try and contact you. These are usually known as debt collection agencies or debt collectors.
Unless they tell you that the debt has been sold on, they are working on behalf of the creditor and the creditor still owns the debt.
Alternatively they may sell your debt to another company. A ‘debt purchaser’ buys up debts to collect rather than chasing debts owned by other companies.
The benefits of selling the debt are that the creditor usually has no more involvement in collecting it, and they get some money back straight away.