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The Business of Buying Debt

Posted On : Nov-03-2009 | seen (1163) times | Article Word Count : 527 |

WHILE most of us would want to get out of a debt mess, there is actually a lucrative business whose business is to “buy debt”. While collecting somebody else’s debt is already in itself a big business, buying debt is a much lucrative scheme.
WHILE most of us would want to get out of a debt mess, there is actually a lucrative business whose business is to “buy debt”. While collecting somebody else’s debt is already in itself a big business, buying debt is a much lucrative scheme. There is however a need to emphasize that in this type of business, the bigger the potential, the higher the risk.

Lending firms and individuals, who find it extremely difficult to collect from people of entities who borrowed money from them, often seeks the help of the collecting agencies if only to be able to recover their resources.

Getting collecting agencies to press payment from somebody who just won’t pay up for his or her borrowings is no guarantee however that he’d be able to recover the entire amount that is owed from him.

Revenue terms

In the United States, collecting agencies negotiate for a percentage over whatever amount is collected. There are however some instances when a person in dire need of a collecting agent caves in to a 50-50 sharing agreement, especially when the account is deemed as “bad debt”. Bad debt is a banking term for collectibles with very small possibility of being collected. People who consider their money gone to “bad debts” are settling even for less or better than none.

Using the court to collect

Collecting agencies, or litigation referral companies, as what they are called in the corporate circle in the United States, are maintaining a pool of legal professionals whose tasks include assisting people or lending companies in their recovery requirements.

The collecting agencies use a variation of method in collection. In many instances, the tedious process is taken to the courts, where lawyers from the collecting agency battle in out. Clients are spared from having to go distance to attend the court hearings.

In the midst of the litigation process, people sued over non-payment of debt usually agree on a settlement agreement to avoid jail term. The agreement however proves much costly than what they actually owe, as attorney’s fees and other litigation expenses are charged to him or her.

Collecting what could be collected

In cases when the borrower is deemed as bankrupt, the collecting agency settles for whatever could be collected. Collections are sometimes made in other forms. It could be anything of value --- parcel of land, house, cars, appliances, office equipment, among others.

From what has been collected, the collection agency usually auctions them in an apparent attempt to convert whatever they got into cash. From the proceeds, computation on the sharing agreement is made.

At a time when the Unites States is faced with economic hardships, collection is of utmost importance. While there is truth that debtors are sometimes negligent or delinquent for something that they owe, it is also a consideration that collection should be made in a deal that would somehow be acceptable to both parties. In the US, most of the litigation cases are resolved with the help of the third party, which makes it a lot more costly. GP

Article Source : http://www.articleseen.com/Article_The Business of Buying Debt_4864.aspx

Author Resource :
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Keywords : Bad Debt, Wipe your Debt, Unenforceable Loans, credit cards, credit card debt, Wilson field citizens advice, free debt advice,

Category : Finance : Debt Consolidation

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