What is a debt buyer?

There is a multi-billion dollar industry where companies buy portfolio's of debt from original creditors with the intention of collecting those obligations by either traditional methods such as telephone and mail, or by legal methods such as bringing a lawsuit, obtaining a judgment, and commencing a wage garnishment or other legal remedy.

Some debt buyers are also reffered to as "junk debt buyers" due to having a reputation of buying old debts that are near or beyond the applicable statute of limitations to bring a lawsuit. These bottom-feeders sometimes buy debts for as little as a penny on the dollar, with the intention of collection as much as they can from the full balance.

Example of a debt buyer transaction

Let's say a borrower defaults on a credit card for the amount of $10,000. The creditor may try to collect on their debt using their in-house agents, and they may also assign the debt to an outside agency to collect on their behalf. If their efforts are not fruitful, they might review the file to possibly bring a lawsuit. They may also sell the debt to a debt buying entity for, let's say, $500. The entity would then attempt to collect up to the full balance, and if they are successful, they stand to make a lucrative return on investment. If the debt buyer is unsuccessful in traditional collection efforts, they too may review the account for possible litigation, and they too might consider selling the account to another company.

The series of sales and assignments between the various entities forms the "Chain of Title".

Examples of debt buyers that collect in New York

Some of the common debt buyers that we see are: Midland Funding, LVNV Funding, LR Credit, Metro Portfolios, Cach llc, Rushmore Recoveries, Cavalry Portfolio, Portfolio Recovery Group

To learn more about a particular entity, you can visit our list of debt collection agencies.