Collection agencies differ from original creditors — they are outside agencies which the original creditor either sells your account to, or hires to recover the debt. Even if your creditor threatens to transfer your debt to a collection agency, no law exists requiring it to do so within a certain time frame. All creditors' policies differ. Fortunately, you can usually tell if your original creditor no longer has responsibility for your account.
Once your creditor sends your account to a collection agency, collection activity will increase. Collection activity includes, but is not limited to, telephone contact, collection letters and emails requesting payment. The Fair Debt Collection Practices Act requires debt collectors to disclose their employer if you ask. In addition, any collection letters you receive should arrive on the company's letterhead. While this does not guarantee that your original creditor no longer owns your account, it does indicate the possibility that your account was sent to an outside agency. The FDCPA requires a collection agency to include the fact that you have the right to dispute the debt within the company's initial written communication. This notation typically appears in fine print at the bottom or on the back of the letter. Should you see this disclaimer, a collection agency now owns your account.
Certain companies employ in-house collection departments with official-sounding names that indicate the creditor sent your debt to an outside agency when, in fact, it did not. Creditors anticipate that debtors will take payment requests from a collection agency more seriously than payment requests from the creditor. Thus, creditors sometimes allow their collections departments to operate under a different name in order to fool debtors into believing an outside agency holds their debt — and subsequently paying it off. This practice is most common with credit card companies.
The older your debt is, the more likely your creditor is to send it to a third-party collection agency rather than its in-house collection department. After 180 days, most credit card companies write off bad debts and transfer them to outside agencies rather than leaving them the responsibility of the in-house collectors. Health care providers typically transfer debts to outside agencies much more quickly. Policies regarding unpaid debt vary depending on the creditor. In general, if you have not made a payment on your debt in over six months, any contact you receive regarding the account will come from third-party debt collectors. Yet another indicator that a collection agency holds your account is if collection efforts appear to cease for a time and then resume. This cease in communication occurs during the transfer process.
When in doubt, check your credit reports. Collection agencies typically report consumer accounts to one or more of the credit bureaus. The collection accounts then appear within your credit profile. Collection accounts are separate trade lines from the original creditor's trade line, and are listed under the heading "derogatory debts." When reviewing your credit reports for collection accounts, check your credit records from all three credit bureaus: Experian, Equifax and TransUnion. While some collection agencies report debts to all three, others do not.