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A debt buyer, like the name suggests, is an individual or company that purchases delinquent or charged-off debts from creditors and make attempts to collect the sum owed. In most cases, such buyers are companies in the form of collection agencies or private debt collection law firms. Debt buying companies use different strategies in collecting the amount owed, which may involve employment of their own resources or hiring other firms to do it.
It is also not common to see buyers repackaging and reselling debts they have purchased to other buyers in whole or in part. In other word, many things can happen to debts once they have been bought from the original creditor. However, debts only become legible for selling if a debtor has defaulted for a given period of time. The debtor gets a written notification from the creditor when a debt is being sold to a buyer. This is done in the form of a letter.
There is a big difference between collection agencies and companies involved with purchase of debts from debtors. Such companies are usually the new owners of the debts they buy as opposed to collection agencies that represent and work for the creditor. Any connections between debtors and creditors resulting from debts are usually terminated upon transfer of ownership. Future dealing now happen between the new owner and the debtor.
Buyers pay pennies on the dollar for debts and when they collect, the profit is usually very exorbitant. Low prices coupled with bulk purchases raises profits a lot. Even if the buyer manages to collect just a fraction of the sum owed, they still make a big profit because of low purchase prices. That is why debtors are likely to get good settlement offers once their debts are sold to a buyer.
Transfer of debt ownership may mean a good as well as a bad thing for debtors. Unaggressive buyers who offer favourable settlement offers make life easier for debtors. However, aggressive buyers who seek to sue the debtor can make life very hard. Buyers sue debtors in some cases, but it is often rare for that to happen.
One problem with sold debts is that the information is mostly largely inaccurate. In fact, creditors sell debts as is, which implies that they may not guarantee the accuracy of information given. Additionally, creditors often fail to provide all information or the original paperwork involved in the process. Sometimes, this makes it hard for buyers to collect and sometimes, it may make things more difficult for debtors.
One major issue that arises from purchase of debts is that creditors may not have credited payments made earlier. Miscalculation of interest charged is also a common problem. Additionally, in case the sum owed gets discharged in bankruptcy, debtors may never know about it. They just end up paying such amounts.
However, there is a bright side in selling of debts in that they may be too old to be collected through legal action. In such cases, a debtor cannot be sued, leaving the purchaser at their mercy. The debtor can pay or neglect to pay.
It is also not common to see buyers repackaging and reselling debts they have purchased to other buyers in whole or in part. In other word, many things can happen to debts once they have been bought from the original creditor. However, debts only become legible for selling if a debtor has defaulted for a given period of time. The debtor gets a written notification from the creditor when a debt is being sold to a buyer. This is done in the form of a letter.
There is a big difference between collection agencies and companies involved with purchase of debts from debtors. Such companies are usually the new owners of the debts they buy as opposed to collection agencies that represent and work for the creditor. Any connections between debtors and creditors resulting from debts are usually terminated upon transfer of ownership. Future dealing now happen between the new owner and the debtor.
Buyers pay pennies on the dollar for debts and when they collect, the profit is usually very exorbitant. Low prices coupled with bulk purchases raises profits a lot. Even if the buyer manages to collect just a fraction of the sum owed, they still make a big profit because of low purchase prices. That is why debtors are likely to get good settlement offers once their debts are sold to a buyer.
Transfer of debt ownership may mean a good as well as a bad thing for debtors. Unaggressive buyers who offer favourable settlement offers make life easier for debtors. However, aggressive buyers who seek to sue the debtor can make life very hard. Buyers sue debtors in some cases, but it is often rare for that to happen.
One problem with sold debts is that the information is mostly largely inaccurate. In fact, creditors sell debts as is, which implies that they may not guarantee the accuracy of information given. Additionally, creditors often fail to provide all information or the original paperwork involved in the process. Sometimes, this makes it hard for buyers to collect and sometimes, it may make things more difficult for debtors.
One major issue that arises from purchase of debts is that creditors may not have credited payments made earlier. Miscalculation of interest charged is also a common problem. Additionally, in case the sum owed gets discharged in bankruptcy, debtors may never know about it. They just end up paying such amounts.
However, there is a bright side in selling of debts in that they may be too old to be collected through legal action. In such cases, a debtor cannot be sued, leaving the purchaser at their mercy. The debtor can pay or neglect to pay.
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