When a creditor cannot recover a defaulted debt, it often sells it to a debt purchaser, sometimes called a debt collection agency, for less than the full amount owed. The debt itself does not change, but your credit file can end up showing the same default in two places: once under the original creditor and again under the new owner. Sorting out which entries relate to the same debt matters before you apply for a remortgage, so you and an adviser both know exactly what is on your file.
This page explains why debts are sold, why the same debt can appear to show twice, why the default date should not change, and how to deal with the new owner. Our main page on remortgaging with defaults explains how defaults are dated and recorded more generally.
On this page
This page covers
- Credit issue
- DefaultsUsually stays on your credit file for 6 years from the default date.
Read the main guide: Remortgaging with defaults on your credit file
In short
- Selling a debt to a collector does not create a new debt or change what is owed.
- The default date should stay the same as when the original creditor registered it.
- The same debt can appear under both the original creditor and the new owner, which can look like two defaults.
- Always check who currently owns a debt before you pay anything towards it.
Why was my default sold to a debt collector?
Once an account has defaulted and a creditor has been unable to recover the money directly, it will sometimes sell the debt on rather than continue chasing it itself. The buyer, often called a debt purchaser or collection agency, pays the original creditor a reduced amount for the right to collect the debt, then pursues the account holder for the outstanding balance.
This happens across all kinds of defaulted debt, from credit cards and loans to phone and utility accounts, and it does not mean anything unusual happened with your account. It is simply how many creditors manage debts they have written off internally.
Why might the same debt show twice on my file?
When a debt is sold, the original creditor usually updates its entry to show the account was defaulted and later sold or transferred, often with a zero balance from its point of view. The buyer then reports its own entry showing it now holds the debt and the balance outstanding. Seen together, this can look like two separate defaults rather than one debt that has simply changed hands.
| Entry | What it usually shows | What it means |
|---|---|---|
| Original creditor | Defaulted, balance transferred or zero | The debt has moved to a new owner |
| New owner (debt purchaser) | Defaulted, with the outstanding balance | This is the entry now being actively collected |
Exact wording varies between Experian, Equifax and TransUnion and between creditors.
If you have more than one sold debt on your file, working through them alongside any other defaults is covered on our page on multiple defaults.
Does selling a debt reset or change the default date?
It should not. The default date is set once, when the original creditor decides the account has broken down, normally after about 3 to 6 months of missed payments. Selling the debt afterwards is an administrative change of ownership, not a new default, so the 6 years should still run from that original date, whichever company is now shown as holding the debt.
If the entry from the debt purchaser shows a later default date than the original account, that could unfairly extend how long the debt stays on your file. Raise it with the debt purchaser and the credit reference agency, and ask for the original default date to be confirmed and corrected if needed.
What to check before you apply, and dealing with the new owner
Before an adviser looks at your file, it helps to know exactly how many separate debts you have, rather than how many entries appear.
- Match each entry to an original account, so sold debts are not counted twice
- Confirm the default date is the same on both the original and the new entry
- Check only one entry shows an outstanding balance for each debt
- Ask the current owner for a full statement before paying anything
- Keep any payment or settlement letters from whoever you actually paid
If a debt collector contacts you, you can ask for confirmation in writing that it owns the debt and how much it says is owed, before agreeing to pay anything. If you are unsure whether a debt is genuine or correctly recorded, National Debtline can give free advice. Once a sold debt is settled, see satisfied defaults for what should change on your file.
What lenders may weigh with a sold default
| Factor | Why it matters |
|---|---|
| Number of genuinely separate debts | Counting a sold debt once, not as two, gives an accurate picture of your file. |
| Default date | Should match the original creditor’s record, regardless of who now owns the debt. |
| Current balance | What the new owner says is outstanding now, compared with the original amount. |
| Settlement status | Whether the debt has been settled with the current owner, and confirmation in writing. |
| Type of original account | Utility, phone or credit accounts may be viewed differently, whoever now holds the debt. |
| Mortgage payment history | Whether your mortgage stayed up to date while this default was outstanding. |
| Loan to value and equity | More equity generally widens the choice of lender. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- A list of each debt, showing the original creditor and the current owner
- The default date shown on both the original and any new entry
- The current outstanding balance from the company you would actually pay
- Any settlement or payment letters from the current owner
- Copies of your reports from Experian, Equifax and TransUnion
- Your mortgage balance, deal end date and any early repayment charges
Frequently asked questions
Do I owe more because my debt was sold to a collector?
No. Selling a debt transfers the right to collect it, but it should not change the amount owed. If the balance shown is higher than you expect, ask the current owner for a full breakdown before paying anything.
Why does my credit file show the same default under two different names?
This usually happens because the original creditor sold the debt to a collection agency or debt purchaser. Both may keep an entry on your file: one showing the debt was transferred, and one from the new owner showing the balance it is now collecting.
Should I pay the original creditor or the debt collector?
Once a debt is sold, you should normally pay the new owner, since it now holds the right to collect. Ask for written confirmation that it owns the debt and the correct balance before making any payment.
Can a debt collector make my default stay on file for longer?
It should not. The 6-year period runs from the original default date, not from when the debt was sold or from any later date the new owner may show. If a later date appears, raise it with the debt purchaser and the credit reference agency.