I’ve seen stories of individuals buying up a bunch of debt for cents on the dollar then just forgiving it. Why can’t this been done on an individual scale?
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One must also realize debt buying has dwindled greatly after the rise of the CFPB. And most collections happen on contingency anyway, basically outsourcing, hence 3rd party collections. As the original commenter pointed out aging of debt, you may have had first, secondary, tertiary, and even a quad placement before it’s sold off as a debt purchase. That means four different agencies tried collecting and if the lender is still holding the paper by that time it’s been at least a year or two if not more. Debt buyers can come into play at any stage of delinquency the more prime the more expensive. Once you get past seven years it does fall off the credit report, that didn’t stop certain debt buyers from trying to collect on, what was literally termed, zombie debt. That’s one of the reasons the CFPB cracked down and the industry cleaned up. Also because the original creditor could be held liable for illegal tactics conducted by the contingency agency or the debt buyer. Check out UDAAP. All the big banks and card issuers couldn’t take that risk so defaulted accounts only went to reputable agencies. Student loan debt was huge business too, some agencies specializing solely in that debt market. All that crashed considerably too.
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