5 ms·

> The average price, according to a 2013 Federal Trade Commission (FTC) report, is about 4 cents per dollar, which means a $200 credit card balance goes for $8

> The average price, according to a 2013 Federal Trade Commission (FTC) report, is about 4 cents per dollar, which means a $200 credit card balance goes for $8 on the secondary market. Wow, that is cheap. Is there a way to buy your own debt?

arthurcolle 7y ago
They don't like to do this, but I think some people do it in a roundabout manner. A service that lets you do this would be hilarious, but would probably collapse the marketability of consumer debt instruments.
chrisseaton 7y ago
People only usually sell bad debt. If the debt isn’t bad and is making you money why would you sell it? The only reason may be to release capital. So if you’re a bad debtor or your creditor is in trouble then yes your debt may be worth this little, and in which case you may already be able to call your creditor and offer to settle now at a discount. If you’re a normal professional with a standing credit card debt that you pay off every month? Then no this debt is likely not for sale at a discount.
- ben509 7y ago
  > If the debt isn’t bad and is making you money why would you sell it? To liquidate it, or to replace it with an asset that has a better return.
  - chrisseaton 7y ago
    I already said that, in the next sentence > The only reason may be to release capital. But if you have normal consumer debt and are a typical professional this isn’t likely to apply to you.
- smabie 7y ago
  People buy and sell bonds and debt all the time for the same reason they buy and sell stocks or anything else. So they can put the money to work in some other place with a higher expected return.
sailfast 7y ago
To make this work you would need a lender willing to lend four cents on the dollar to someone that has defaulted on a lot of debt for awhile (typically not someone that can obtain credit easily) There may be an opportunity for a non-profit or micro-lender here though.
analog31 7y ago
My dad tried to buy the mortgage on our family home from the local bank. It was at a time of rapidly rising interest rates, and according to the textbook calculation, our mortgage was costing the bank to hang onto. He figured out the fair market value of the mortgage, and offered to split the difference with the bank. Each side would profit. The banker's first reaction was: This can't be real. A week later, the banker called my dad back and said: Sure enough, the numbers say that we should sell you your mortgage. But we also found out that it's illegal. I don't know the details of why it might have been illegal, but it was an amusing episode.
- pedrocr 7y ago
  Isn't buying your own mortgage from the bank just the same as negotiating conditions to pay off the whole mortgage early? Why would that be illegal?
  - Simon_says 7y ago
    The dad wanted to pay less than the balance of the mortgage.
    - gizmo686 7y ago
      Which isn't normally a crime. The lender is allowed to forgive part of a loan if they want to. The borrower would owe taxes on the difference. Normally this comes up with people who aren't paying at all, where the lender (or owner of the mortgage) is happy to salvage any money from the loan, even if less then the face value.
- DennisP 7y ago
  People sell mortgages all the time. Is it just illegal to sell a mortgage to the borrower? If so, suppose two borrowers team up and buy each others' mortgages?
  - analog31 7y ago
    In response to both the posts here, I don't know. It also could be that the banker was full of it. On the other hand, I could imagine a sort of moral hazard situation where someone could take out a loan, let it go into default, and then offer to buy it back at a massive discount.
llamataboot 7y ago
It is very hard to buy your own debt. It is very easy to buy other's debt for very cheap and just write it off though. See: https://rollingjubilee.org/ https://rollingjubilee.org/ https://www.theguardian.com/us-news/2016/jun/06/john-oliver-medical-debt-forgiveness-last-week-tonight https://www.theguardian.com/us-news/2016/jun/06/john-oliver-... -- You can, however, dispute your debt and make the process of collecting it legally arduous https://debtcollective.org/ https://debtcollective.org/
- debtbuyersplus 7y ago
  Unfortunately, Rolling Jubilee has been quiet since 2014. I wonder what happened to them.
- rdtsc 7y ago
  > and just write it off though There are some difficulties in there such as the individual who got the loan written off, may have to pay income taxes on a part of the loan. It's still nice of course, but it's certainly not straightforward.
patio11 7y ago
Logistically extremely challenging. A thing you can do, quite successfully, is say “I will offer you $20, in full satisfaction of this $200 debt and anything you are tacking onto that. Give me that in writing and you’ll get a check via courier.” (I long ago had a hobby of getting people out of consumer credit situations by writing letters, and this is one genre of the letter. Note that it won’t always work; the firm can’t make a practice of selling debt at basis, obviously, but something beats nothing and you can often convince them that those are their two options.) It is very, very important that if one does this one gets the deal in writing, otherwise it has a bad tendency to a) be treated as a payment rather than a pay-off and b) guarantees they and other creditors will call you harder because you’ve signaled that you are in the N% of accounts willing to pay.
- PopeDotNinja 7y ago
  This can be tricky. You can end up being liable for income tax of the debt that's been forgiven.
- hanoz 7y ago
  > I long ago had a hobby of getting people out of consumer credit situations by writing letters... Whilst you're here, I must thank you for the wonderful advice in your article on that subject, which was posted in this place some years ago. If I were to distil it down to a single phrase I think it would be "present as if you're collecting a paper trail". This was hugely helpful in helping me help my wife dispense with an egregious parking charge last year, and I feel it has put me in good stead to handle similar matters in the future. I owe you a drink. https://www.kalzumeus.com/2017/09/09/identity-theft-credit-reports/ https://www.kalzumeus.com/2017/09/09/identity-theft-credit-r...

arthurcolle 7y ago

They don't like to do this, but I think some people do it in a roundabout manner. A service that lets you do this would be hilarious, but would probably collapse the marketability of consumer debt instruments.

chrisseaton 7y ago

People only usually sell bad debt. If the debt isn’t bad and is making you money why would you sell it? The only reason may be to release capital. So if you’re a bad debtor or your creditor is in trouble then yes your debt may be worth this little, and in which case you may already be able to call your creditor and offer to settle now at a discount. If you’re a normal professional with a standing credit card debt that you pay off every month? Then no this debt is likely not for sale at a discount.

ben509 7y ago
> If the debt isn’t bad and is making you money why would you sell it? To liquidate it, or to replace it with an asset that has a better return.
- chrisseaton 7y ago
  I already said that, in the next sentence > The only reason may be to release capital. But if you have normal consumer debt and are a typical professional this isn’t likely to apply to you.
smabie 7y ago
People buy and sell bonds and debt all the time for the same reason they buy and sell stocks or anything else. So they can put the money to work in some other place with a higher expected return.

sailfast 7y ago

To make this work you would need a lender willing to lend four cents on the dollar to someone that has defaulted on a lot of debt for awhile (typically not someone that can obtain credit easily) There may be an opportunity for a non-profit or micro-lender here though.

analog31 7y ago

My dad tried to buy the mortgage on our family home from the local bank. It was at a time of rapidly rising interest rates, and according to the textbook calculation, our mortgage was costing the bank to hang onto. He figured out the fair market value of the mortgage, and offered to split the difference with the bank. Each side would profit. The banker's first reaction was: This can't be real. A week later, the banker called my dad back and said: Sure enough, the numbers say that we should sell you your mortgage. But we also found out that it's illegal. I don't know the details of why it might have been illegal, but it was an amusing episode.

pedrocr 7y ago
Isn't buying your own mortgage from the bank just the same as negotiating conditions to pay off the whole mortgage early? Why would that be illegal?
- Simon_says 7y ago
  The dad wanted to pay less than the balance of the mortgage.
  - gizmo686 7y ago
    Which isn't normally a crime. The lender is allowed to forgive part of a loan if they want to. The borrower would owe taxes on the difference. Normally this comes up with people who aren't paying at all, where the lender (or owner of the mortgage) is happy to salvage any money from the loan, even if less then the face value.
DennisP 7y ago
People sell mortgages all the time. Is it just illegal to sell a mortgage to the borrower? If so, suppose two borrowers team up and buy each others' mortgages?
- analog31 7y ago
  In response to both the posts here, I don't know. It also could be that the banker was full of it. On the other hand, I could imagine a sort of moral hazard situation where someone could take out a loan, let it go into default, and then offer to buy it back at a massive discount.

llamataboot 7y ago

It is very hard to buy your own debt. It is very easy to buy other's debt for very cheap and just write it off though. See: https://rollingjubilee.org/ https://rollingjubilee.org/ https://www.theguardian.com/us-news/2016/jun/06/john-oliver-medical-debt-forgiveness-last-week-tonight https://www.theguardian.com/us-news/2016/jun/06/john-oliver-... -- You can, however, dispute your debt and make the process of collecting it legally arduous https://debtcollective.org/ https://debtcollective.org/

debtbuyersplus 7y ago
Unfortunately, Rolling Jubilee has been quiet since 2014. I wonder what happened to them.
rdtsc 7y ago
> and just write it off though There are some difficulties in there such as the individual who got the loan written off, may have to pay income taxes on a part of the loan. It's still nice of course, but it's certainly not straightforward.

patio11 7y ago

Logistically extremely challenging. A thing you can do, quite successfully, is say “I will offer you $20, in full satisfaction of this $200 debt and anything you are tacking onto that. Give me that in writing and you’ll get a check via courier.” (I long ago had a hobby of getting people out of consumer credit situations by writing letters, and this is one genre of the letter. Note that it won’t always work; the firm can’t make a practice of selling debt at basis, obviously, but something beats nothing and you can often convince them that those are their two options.) It is very, very important that if one does this one gets the deal in writing, otherwise it has a bad tendency to a) be treated as a payment rather than a pay-off and b) guarantees they and other creditors will call you harder because you’ve signaled that you are in the N% of accounts willing to pay.

PopeDotNinja 7y ago
This can be tricky. You can end up being liable for income tax of the debt that's been forgiven.
hanoz 7y ago
> I long ago had a hobby of getting people out of consumer credit situations by writing letters... Whilst you're here, I must thank you for the wonderful advice in your article on that subject, which was posted in this place some years ago. If I were to distil it down to a single phrase I think it would be "present as if you're collecting a paper trail". This was hugely helpful in helping me help my wife dispense with an egregious parking charge last year, and I feel it has put me in good stead to handle similar matters in the future. I owe you a drink. https://www.kalzumeus.com/2017/09/09/identity-theft-credit-reports/ https://www.kalzumeus.com/2017/09/09/identity-theft-credit-r...