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

A doesn’t have to consent to the sale between B and C for it to be legal, typically, when loans are originally made between A and B there is a clause which allows B to sell or transfer the debt to someone else. C didn’t buy the debt off of B as a “gift,” they bought it with the expectation that they will be able to collect the money owed

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