Buying Debt Portfolios - Learn More About The Debt Portfolio Purchasing

Buying bad debt is growing at a rapid pace in this country. One of the main reasons for this is steady high unemployment, growing consumer debt and default rates, due to the poor economy.

Florida, FL (prHWY.com) March 23, 2013 - Florida, Mar 23, 2013 - Buying bad debt is growing at a rapid pace in this country. One of the main reasons for this is steady high unemployment, growing consumer debt and default rates, due to the poor economy. Debt portfolios can usually be bought for pennies on the dollar. Such deeply discounted pricing can potentially mean great profits. Pricing is based on a few factors: the freshness of the accounts, and the number of times they've been placed previously with a collection agency. Accounts having been placed with more than one collection agency are discounted even greater.

Those buying debt are typically larger companies, such as hedge fund investors, private equity firms, sometimes even collection agencies or private debt collection law firms.

They purchase these delinquent or charged-off debts from a creditor for a fraction of the face value of the debt. The debt buyer can then collect on its own utilize the services of another collection agency, repackage and resell portions of the purchased portfolio or any combination of these options.

Purchased debt portfolios usually consist of charged off consumer credit card accounts, telecom, pay day loans, medical, or utility debt. Banks also sell their loans that have been charged off, as well as charged off checking and ATM/debit accounts, called demand deposit accounts. Bidders weren't allowed to make evaluations before bidding on them. As such, purchasers didn't know what they'd purchased until after the auction was over.

Debt buyers, usually comprised of public or private companies, private equity firms, hedge fund investors, individuals, and even collection agencies, typically buy portfolios of charged off, delinquent debt from banks, hospitals, municipalities, telecom companies, or other credit granters.

These purchased debt portfolios, which represent millions of dollars in unpaid delinquencies, are often large balance accounts. However, they're usually acquired at some discount.

The standard wisdom is that larger balance accounts can mean greater profit potential for the debt buyer. In similar fashion, the majority of collection agencies tend to prefer larger balance accounts, and they focus the lion share of their collection efforts on these.

Buying Debt Portfolios - Banks and other institutions usually focus more of their internal collection efforts on larger balance accounts, because of the greater risk involved should these default. Because of limited in house collection personnel, banks don't place much focus on smaller balance accounts. These can often be purchased at great discounts.

The important thing is finding collection agencies who specialize in small balance DDA accounts. Many collection agencies focus most of their recovery efforts on larger balance accounts because of the larger profit potential.

Because of this, banks and other credit granters typically lower their prices for small balance debts to make them more appealing to debt buyers.

Debt collection agencies with expertise in collecting smaller balance demand deposit accounts report success recovery rates in the double digits. For debt buyers, this means a great opportunity, and its not unusual to see investment returns of 50% or better!

Debt buyers should seriously consider smaller balance accounts. Typically, debtors pay off their smaller balance accounts first. This gives them a sense of making headway. This can seem a more manageable approach than attempting large balance credit card, or other accounts, which can feel overwhelming. After paying off small accounts, they then feel empowered to take on the larger accounts.


About the Author:

Buying Debt Portfolios - Fortna Auctioneers & Marketing Group is a creative, innovative, people-oriented and technologically-savvy real estate auction firm. Our work consistently delivers personal satisfaction and success, resulting in mutual pride by all parties involved in the sale.
Contact Details:
Fortna Auctioneers & Marketing Group
26 E. Main Street * Annville, PA 17003
Phone: 717.867.4451
E-mail: auctions@fortnaauctioneers.com

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