If a debt collector purchases bad debt from a hospital, does the debt collector have the ability to legally pursue recuperating the money?

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If a debt collector purchases bad debt from a hospital, does the debt collector have the ability to legally pursue recuperating the money?

Asked on May 7, 2012 under Bankruptcy Law, Ohio

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If the debt had actually been charged off as uncollectible, then the debt collector should not be able to pursue it; when a debt is charged off, it is declared uncollectible and unenforceable, and the creditor gets a tax benefit (a tax loss). However, it was merely a "bad debt" in the sense that it had not been paid, but had not been actually charged off, then the debt collector may purchase or assume the debt, stepping into the shoes of the original creditor with all its rights, including the right to take legal action to secure payment.


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