4 ms·
That's really smart. Do banks have some way of detecting if the buyer isn't associated with the debtor?
by CMCDragonkai 12y ago
That's really smart. Do banks have some way of detecting if the buyer isn't associated with the debtor?
- downandout 12y agoI'm not sure that there would be any incentive to. Once they've decided to sell, a high bidder is a high bidder (though it's obviously frowned upon, otherwise he would have gone himself).
- patmcguire 12y agoThey might not care. It's money now, versus an asset that would still be technically in default. It was a liquidity crisis, or at least that was the official line... $3.4 million in cash might be worth more to them than $18m in bad debt even if it was repaid - it isn't good on balance sheets, and with all the regulations about how much money has to back what and what counts as backing (and private contractual obligations - how do the credit default swaps outstanding treat something that's paying interest only vs a total writeoff), without knowing the details almost anything could be the case.
- danboarder 12y agoYour observation reminds me of the http://rollingjubilee.org http://rollingjubilee.org project that buys up consumer debt for pennies on the dollar and then simply cancels it.
- ncarroll 12y agoI hadn't heard of this project before. Thanks for the link and the heads up.
- nerfhammer 12y agoDoes the debtor owe taxes on amount cancelled?
- scott_karana 12y agoFrom the page: > Will the Rolling Jubilee have to file a 1099-C Cancellation of Debt form with the IRS? No. The Rolling Jubilee will earn no income from the lending of money and is therefore exempt from filing a Form 1099-C under the Internal Revenue Code Section 6050P.
- nerfhammer 12y agoThat doesn't necessarily mean you aren't supposed to report it as income when you file for your tax returns even if they don't file a 1099 for you