What does it mean when a debt is sold?
When a company cannot collect a debt, it often sells it to a debt purchaser — typically for a fraction of the face value. The purchaser then attempts to collect the full amount, making profit on the difference. Companies like Cabot Financial, Lowell, PRA Group, and others operate this way.
The sale of a debt does not change your underlying rights. Everything you could have argued against the original creditor — that the debt is statute barred, that the agreement is unenforceable under the CCA, that the amount is wrong — you can still argue against the purchaser.
What the new owner must prove
That the debt exists — they must be able to identify the original agreement, the original creditor, and the amount owed at the time of sale.
That they own it — they must show a valid assignment of the debt to them. This is called a Notice of Assignment.
That the agreement is enforceable — if you send a CCA request, they must produce the original signed credit agreement. Many purchasers of old debts cannot do this.
That the amount is correct — the debt should not have grown with additional charges beyond what was permitted in the original agreement.
What to do when you receive the letter
- Check whether you recognise the original debt and creditor mentioned in the letter.
- Check the date of the last payment or acknowledgment — is the debt statute barred (over 6 years)?
- Send a CCA request to the new owner if the debt relates to a regulated credit agreement.
- Request a copy of the Notice of Assignment showing the debt was properly transferred to them.
- Do not make any payment until you have verified the debt is valid and enforceable.
Do not assume the amount is correct. Debt purchasers sometimes add charges that were not permitted under the original agreement.
Do not acknowledge the debt in writing carelessly. Saying "I remember this loan" in a letter resets the statute of limitations clock.
Not sure if this new company has a right to collect?
Upload the letter and get a clear assessment — including what they need to prove and a ready-to-send response.
Upload your letter — it's free →Only if those charges were permitted under the original credit agreement. They cannot invent new fees. If the total they are claiming is higher than what you originally owed plus contractual interest and charges, the difference is likely unenforceable.
Once the debt is sold, the new owner is your creditor. The original creditor no longer has a claim against you. You deal with the purchaser — but all your consumer rights apply to them.