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 fun part about this whole thing is that it’s how some organisations have been able wipe tens of millions in medical debt by buying the debt for pennies on the dollar. Hell, there’s an NY non-profit org called RIP Medical Debt that tracks bundled debt portfolios that are being sold off and swoop in to buy them.

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