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Is it true that if a loan institution passes your debt to another loan institution you are no longer obligated?

Is it true that if a loan institution passes your debt to another loan institution you are no longer obligated?

Q: Can an original creditor buy back debt?

Yes, an original creditor can buy back debt that they previously sold to another lender or collection agency. This process is known as 'buying back' or 'repurchasing' the debt. If they do so, you would then be obligated to pay the original creditor again, as your debt obligation remains unchanged regardless of who owns it.

Q: Do you have to pay a debt that has been sold to another company?

Yes, you are still required to pay a debt even if it has been sold to another company. Your obligation to repay the debt does not change with the transfer of ownership. The new creditor has the right to collect the debt, and you should continue making payments as agreed unless you dispute the debt.

Q: Can I dispute debt if my original creditor sold?

Yes, you can dispute a debt even if your original creditor sold it. If you believe the debt is inaccurate or invalid, you can send a dispute letter to the new creditor. They are required to investigate your claim. Make sure to document your communications and keep records of your dispute.

Q: Is it legal for a debt collector to buy your debt?

Yes, it is legal for a debt collector to buy your debt from the original creditor. When they purchase the debt, they acquire the right to collect it. You are still obligated to pay the debt, and the collector must follow the Fair Debt Collection Practices Act (FDCPA) when attempting to collect.

Full question:

Is it true that if a loan institution passes your debt to another loan institution you are no longer obligated to pay back the debt.

Category: Debts and Credit
Subcategory: Lending
Date: 04/07/2025
State: West Virginia

Answer:

No. Unless there is a prohibition against assignment which would be rare then you are still obligated. And even if there was an improper assignment the remedy would be to have the assignment canceled but you would still be obligated on the loan.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

How long before a debt becomes uncollectible?

In general, a debt becomes uncollectible after a certain period, known as the statute of limitations. This period varies by state and type of debt, typically ranging from three to ten years. Once this period expires, creditors cannot legally sue you to collect the debt. However, the debt may still exist, and collectors may attempt to collect it. Always check your state's specific laws for accurate timeframes.