Eli5 how does buying debt work? And why can’t someone just purchase their own debt for a fraction of the cost then cancel it for themselves?

Question

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?

In: 4529

Answer 1

At the point the debt is bought, it’s already been reported as a written off account and harmed your credit score/report.

If you could buy your own debt at pennies on the dollar, then people would just make the practice of doing so until banks just stop lending to people or jack up the interest rates to extreme levels.