What does it mean when a debt is passed to a collection agency?

Hi

I was just wondering what it actually means when a debt has been passed to a debt collection agency. Does it mean that the debt has been sold on or are these agencies just representatives used by the lending institution. I had a bad student debt which resulted in a debt collector calling to my parent's home. I'd actually forgotten about debt (approx €400) and paid it to collection agency within a couple of days. How will this be reflected on my credit record? I'm worried that it will look as if the debt is still outstanding to the bank , even though I have paid it in full. Is any information from debt collection agencies passed back to lending institutions/ICB.I know I probably should have asked the collection agency about this but I was just mortified by the whole thing.

Thanks.

As far as I know lenders either sell such debts on for a fraction of the amount payable or else pass them on and give the collector a significant percentage if/when they extract payment and redeem the remainder to the lender. I suspect that the issue will be recorded on your ICB record. You can check for yourself to see if it has been. See .

It means that the bank has given up hope of collecting the debt from you and recouped some of their money by "selling" the debt to a collection agency.
If anything has appaered on your credit record, it will be the bank you borrowed from that has put it there, based on your payment history with them.
Contact ICB (WWW.IFHA.IE) and get a copy of your credit record to find out what they have on you. Have a look at oasis.ie as well

seeing as the debt is now paid in full the debt collectors should also register that on the ICB site , if they don't do so you can actually sue the bank about it

Hi

I'm feeling that maybe I've achieved nothing by paying this money ?? Although I did transfer the money directly into the original loan account - does this mean that the bank still had some interest in the debt - if the account was still open? Or is this just the normal practice? Also - as this debt was 3 years old when I paid it - have I just added to its life on the ICB by another 3 years ??? (as on oasis website - records are held for 5 years from final payment/account write off etc.)

Wow, who designed that ICB site? Looks like a homework web project! Not very inspiring but maybe it gets the job done.

Unregistered said:

I'm feeling that maybe I've achieved nothing by paying this money

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I cannot confirm that you are wrong in that , sorry. It may be 5 years from last action but as the last action was clearance in full that is what should appear on the record . Anything else , sue them.

2 Questions -
have you had any trouble applying for loans / credit cards over the last 3 years?
Do you have any other loans / credit facilities that are well maintained? IE On time payments etc, that will show lenders you are credit worthy?

Keep in mind you can update your file at ICB with a 200 word"explanation" for your tardiness on this account, but that won`t count for much if you have unpaid debts all over the place.

I did have a couple of credit cards and a loan when I was a student - I admit that they were not maintained to the highest standards but they have all been paid - I don't have unpaid debts all over the place. I have one loan with UB (father guarantor) and a credit card ( low limit €500). I haven't applied for anything else in the last 2.5 years as I'm trying to save for house deposit and be as loan free as possible. I'm just a bit ammoyed (partly with myself) that this debt could look like it has not been paid. Suppose my best option is to get a copy of my record from ICB.

Yep - get a copy of your record.
As mentioned below, the Bank MUST tell ICB that you have paid off the account. If you have paid on your existing loan and credit card regularly then that will show up on your credit record also - they hold good as well as bad info.
It will take about 30 days for the payment info to show up on your file, so if you have only paid this off recently then wait a few weeks before requesting your file.

I worked in the accounts department of a hire purchase company many years ago.

We had a standard set of letters we used to issue to intimidate and frighten people who had fallen into arrears with their loans on normal small household items. The reason they were using our company was because many of them couldn't get credit or didn't have a bank account. The shop where they were buying the item from just got them to sign a few forms and their loan was approved by us. We used to charge extortionate rates of interest and never gave the APR only the simple interest rate.

(he funny thing at the time was that interest on an overdraft was tax deductible while hire purchase interest was not). When the account fell into arrears we used to issue them with a couple of letters, each one stronger than the last one and then we would issue them with a letter stating that we were handing their debt over to a collection agency. Then we would issue them with a letter proporting to come from that agency (there was no phone number on the letter and the address was a Box Number), then another letter saying that the collection agency had passed the debt back to us, then a letter threatening them with court, then a letter giving them 10 days to make a payment, then a letter in red writing with some fancy legal terms in it threatening court action, honestly the list of letters was endless.

When the account was 3 months in arrears we would get a rep from the company to call out to see the person, they had no problem calling to their place of employment as well.

Finally there was some central crowd (can't remember their name) that we used to post a negative review onto and that buggered up your chances of getting credit.

With the data protection act and all the other consumer friendly legislation I would hope this practice has stopped.

Not a very nice place to work but at the time, and being quite young, I suppose a job was a job.

Murt

I doubt that the debt will be recorded with the ICB if you paid within a few days of being notified by the debt collection agency. The letter they sent you would have said pay up within so many days or else they would take legal action against you, your name would be in Stubbs etc. - basically they were trying to scare you to pay up and it worked ! I'd say you have nothing to worry about.