I think you have to factor in the threat of a credit ding. If the debtor knew that reductions would result in a lower credit score (and perhaps the degree of th

I think you have to factor in the threat of a credit ding. If the debtor knew that reductions would result in a lower credit score (and perhaps the degree of the credit penalty would be a function of the debt reduction percentage), then you can bring some parity back into the scenario. I am also not sure how debt is currently priced. But, it would seem that current credit score and other metrics might go into the pricing, such that there is more of an actuarial approach. In this case, the price wouldn't be driven as much by information assymetry. So, combine a lender who is more informed about how much debtors can pay with debtors who have incentive to pay as much as possible to protect their credit, then add the fact that you're throwing out the middlemen (debt collectors). It might be a win-win for the creditor/debtor, with only the debt buyers losing.