eli5 Debt purchaser says they bought your debt and you now owe them. How does that work?

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If A borrows from B, A now owes B

Then C shows up and pays B with the agreement that it settled A’s debt to B.

A does not know any agreement was made but the original A owes B

A goes to pay B.

B says A doesnt owe B.

C says A owes C

But A did not make an agreement that he owed C.

How does A owe C now?

It seems to me that: C gave A the gift of settling A’s debt to B.

In: Economics

12 Answers

Anonymous 0 Comments

The reason it works is usually there is verbal in the contract A signs with B that B can transfer the remaing debt to a third party (C). Without needing consent of A. And that A will now owe C the remaining debt.

So if C want B to transfer the debt then they need to offer something in return. IE buying the debt.

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