But then there's the difference between capacity to pay and willingness to pay. If I had this huge debt, I might be willing to borrow a little from friends to

But then there's the difference between capacity to pay and willingness to pay. If I had this huge debt, I might be willing to borrow a little from friends to get rid of it, so I might only have $800 (+$200 from friend). The creditor realises I can pay $1000, so tries to sell it for $1500. Suddenly I'm stuck again. Also, it could turn out that I could pay $1000, but I won't. There's also a collection cost (hire a guy at minimum wage to stand outside the guy's house for a day costs something).So the $1000 might end up not being worth anything at all.