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CptSternn · 11-13-2012, 01:29 PM

This is a horrible idea. It sounds like it was cooked up by the banks. Here's why -

That $14,000 in debt they bought for $500 was bought from a third tier collection company. See, when a bank loan, credit card, medical bill, or other personal debt defaults it is sold to a collections company. It is sold for about half of what it is worth.

The collection company then tries for a few months to get the money. If they can't get it they then sell it on to another collections company, a second tier collections company that specialises in hard to get paybacks, for again, about half of what they paid for it, so about a quarter of the original value.

These guys are a bit dodgy and underhanded, but sure, they have nothing on the final group of bottom feeders who get it after a couple years, the third tier collections groups who go all out and try and track down and pressure people to pay on these loans, as they don't find that many but when they do they really hammer then as they are making a 75% profit.

Now, you might think buying those loans is a good thing, but you are buying them from tier 3 collection groups for pennies on the dollar as they know even these people who specialise in this cannot collect that money.

What happens if they cannot collect? The statute of limitations kicks in, every state has one for debt, and all the debt is WIPED CLEAN after a certain number of years.

My point is this -

First, by the time it reaches the point you can buy debt for that small amount it is already worthless as multiple companies who spealise in debt collection could not get it. The person who has the debt has already had their credit rating ruined, you are not helping them. All you are doing is paying some bottom feeders for a debt that is never going to be collected anyway that in no way helps the original person, and will be written off in a matter of months.

11-13-2012, 01:29 PM	#13
CptSternn Join Date: Oct 2003 Posts: 4,587	This is a horrible idea. It sounds like it was cooked up by the banks. Here's why - That $14,000 in debt they bought for $500 was bought from a third tier collection company. See, when a bank loan, credit card, medical bill, or other personal debt defaults it is sold to a collections company. It is sold for about half of what it is worth. The collection company then tries for a few months to get the money. If they can't get it they then sell it on to another collections company, a second tier collections company that specialises in hard to get paybacks, for again, about half of what they paid for it, so about a quarter of the original value. These guys are a bit dodgy and underhanded, but sure, they have nothing on the final group of bottom feeders who get it after a couple years, the third tier collections groups who go all out and try and track down and pressure people to pay on these loans, as they don't find that many but when they do they really hammer then as they are making a 75% profit. Now, you might think buying those loans is a good thing, but you are buying them from tier 3 collection groups for pennies on the dollar as they know even these people who specialise in this cannot collect that money. What happens if they cannot collect? The statute of limitations kicks in, every state has one for debt, and all the debt is WIPED CLEAN after a certain number of years. My point is this - First, by the time it reaches the point you can buy debt for that small amount it is already worthless as multiple companies who spealise in debt collection could not get it. The person who has the debt has already had their credit rating ruined, you are not helping them. All you are doing is paying some bottom feeders for a debt that is never going to be collected anyway that in no way helps the original person, and will be written off in a matter of months.