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It's a legitimate need, it's just a corrupted industry because of misaligned incentives. We need some form of debt collections otherwise credit couldn't exist.
by BobJS 3y ago
It's a legitimate need, it's just a corrupted industry because of misaligned incentives. We need some form of debt collections otherwise credit couldn't exist. The problem is that regulations are absolutely inconsistent and don't incentivize people to operate ethically. It's a regulatory problem.
An interesting fact is that a lot of agencies buy debt for about 1 cent on the dollar and liquidate around 2%. Collecting debt is actually very hard and the success rates are super low.
- omginternets 3y agoSure, but what are some of these "interesting mechanics" you referred to in your earlier post?
- BobJS 3y agoDid I say that? I don't recall writing that. It's just credit markets really. Not all that interesting. Most people just don't think about them.
- omginternets 3y agoOk, I had you confused with the person who made the original comment, but you're not really answering the question...
- medvezhenok 3y agoPresumably if the debt is liquidated at 2%, it doesn't make a material difference in offering credit, since it's pretty much a write-off for the credit-issuing institution anyway, right? I'm not seeing how the debt collection in this case helps provide more credit for the economy - might as well just write off the non-performing debt altogether.