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
Think of bonds. Bonds a debt instrument. You buy a bond for a set amount at a certain rate for a set term, say $10,000 at 5% for 10 years. The bond issuer, usually a bank or a government, pays you a monthly coupon of $106. If you hold that bond, you get $106 for 10 years, recouping your original loan, plus a couple grand in interest.
Let’s say that 2 years into the bond, you decide you need cash. You find a buyer, who will give you $8k for the bond. That’s less than what you would have made had you held onto it, but you get the cash now. He takes the bond and gives you $8k. Now he gets the remaining monthly coupon payments and you are done with the deal.
When you take out a loan from the bank, the bank sells packages of these loans in bonds. These bonds are rated based on risk and current interest rates and sold as such.
You certainly could do this individually, but the logistics are harder. If your mom loans your brother money, and you pay your mom to take the loan, then you get the payments from your brother.
You can pay off your loans early depending on the terms. The lender gets less interest but gets the money repaid faster. A bank can use that money to issue new debt to other borrowers.
It’s tough to answer this as ELI5 as there are different types of debt.
I’m going with the belief this is from the now viral church news of $3M bought for $15k, so I’ll focus only on hospital debt.
The story is nice, but it’s also misleading. There is no company going to waive of $3M of debt for a measly $15k, especially if the cost to acquire the debt was higher than that.
So, what’s going on? Likely, a twist of the actual debt.
Someone receives care for $10k. Insurance pays 80%, leaving $2k in debt. The patient falls into a hardship, so the debt is sold to a collector, usually less than the $2k owed.
Now a church gets involved, but this time, they claim to have purchased $10k of debt for $1k and have it dismissed.
As you can see, it’s a little fibbing as the majority of the debt is already paid, but it sure does look good on viral video titles.
What most Americans don’t know is they can do the very same thing.
Before any hospital bill is paid, it should be a priority to request the charge list *and* an itemized bill from the hospital.
The charge list is now a legally required price list hospitals must provide so the patient knows what they were charged.
For the itemized bill, it’s extremely important to review every single item, and question anything which looks out of the ordinary, especially as hospitals are taking scrupulous actions to avoid insurance payouts.
An example of this is consulting an out-of-network provider to review the treatment. Most insurances will deny this instantly, leaving the entire cost to the patient. It should be illegal, but of course it’s not.
Patients should also question extraordinarily insane billing for things such as Tylenol or a hospital gown, none of which should cost more than $50.
By requesting the hospitals why the charge is so high, many will reduce the cost rather than address the question. It’s definitely in a patient’s best interest to question *everything* on the bill that makes no sense. It could literally save thousands and avoid collections.
It is my belief the $3M is exaggerated, but I’m glad some patients had their debt bought out. Unfortunately, it’s going to take a minimum of 7 years for the damage to be removed from credit, but that’s another pain in the ass situation we should address when it comes to an entire financial industry judging us by a damn number.
At any rate, I hope this helps answer the question.
tl;dr – you can, but not with all debt.
It’s tough to answer this as ELI5 as there are different types of debt.
I’m going with the belief this is from the now viral church news of $3M bought for $15k, so I’ll focus only on hospital debt.
The story is nice, but it’s also misleading. There is no company going to waive of $3M of debt for a measly $15k, especially if the cost to acquire the debt was higher than that.
So, what’s going on? Likely, a twist of the actual debt.
Someone receives care for $10k. Insurance pays 80%, leaving $2k in debt. The patient falls into a hardship, so the debt is sold to a collector, usually less than the $2k owed.
Now a church gets involved, but this time, they claim to have purchased $10k of debt for $1k and have it dismissed.
As you can see, it’s a little fibbing as the majority of the debt is already paid, but it sure does look good on viral video titles.
What most Americans don’t know is they can do the very same thing.
Before any hospital bill is paid, it should be a priority to request the charge list *and* an itemized bill from the hospital.
The charge list is now a legally required price list hospitals must provide so the patient knows what they were charged.
For the itemized bill, it’s extremely important to review every single item, and question anything which looks out of the ordinary, especially as hospitals are taking scrupulous actions to avoid insurance payouts.
An example of this is consulting an out-of-network provider to review the treatment. Most insurances will deny this instantly, leaving the entire cost to the patient. It should be illegal, but of course it’s not.
Patients should also question extraordinarily insane billing for things such as Tylenol or a hospital gown, none of which should cost more than $50.
By requesting the hospitals why the charge is so high, many will reduce the cost rather than address the question. It’s definitely in a patient’s best interest to question *everything* on the bill that makes no sense. It could literally save thousands and avoid collections.
It is my belief the $3M is exaggerated, but I’m glad some patients had their debt bought out. Unfortunately, it’s going to take a minimum of 7 years for the damage to be removed from credit, but that’s another pain in the ass situation we should address when it comes to an entire financial industry judging us by a damn number.
At any rate, I hope this helps answer the question.
tl;dr – you can, but not with all debt.
It’s tough to answer this as ELI5 as there are different types of debt.
I’m going with the belief this is from the now viral church news of $3M bought for $15k, so I’ll focus only on hospital debt.
The story is nice, but it’s also misleading. There is no company going to waive of $3M of debt for a measly $15k, especially if the cost to acquire the debt was higher than that.
So, what’s going on? Likely, a twist of the actual debt.
Someone receives care for $10k. Insurance pays 80%, leaving $2k in debt. The patient falls into a hardship, so the debt is sold to a collector, usually less than the $2k owed.
Now a church gets involved, but this time, they claim to have purchased $10k of debt for $1k and have it dismissed.
As you can see, it’s a little fibbing as the majority of the debt is already paid, but it sure does look good on viral video titles.
What most Americans don’t know is they can do the very same thing.
Before any hospital bill is paid, it should be a priority to request the charge list *and* an itemized bill from the hospital.
The charge list is now a legally required price list hospitals must provide so the patient knows what they were charged.
For the itemized bill, it’s extremely important to review every single item, and question anything which looks out of the ordinary, especially as hospitals are taking scrupulous actions to avoid insurance payouts.
An example of this is consulting an out-of-network provider to review the treatment. Most insurances will deny this instantly, leaving the entire cost to the patient. It should be illegal, but of course it’s not.
Patients should also question extraordinarily insane billing for things such as Tylenol or a hospital gown, none of which should cost more than $50.
By requesting the hospitals why the charge is so high, many will reduce the cost rather than address the question. It’s definitely in a patient’s best interest to question *everything* on the bill that makes no sense. It could literally save thousands and avoid collections.
It is my belief the $3M is exaggerated, but I’m glad some patients had their debt bought out. Unfortunately, it’s going to take a minimum of 7 years for the damage to be removed from credit, but that’s another pain in the ass situation we should address when it comes to an entire financial industry judging us by a damn number.
At any rate, I hope this helps answer the question.
tl;dr – you can, but not with all debt.
you can. it’s called offering to pay less than you owe, all at once. most debt collection agencies will gladly reduce the owed amount if you are actually going to pay it off.
you can. it’s called offering to pay less than you owe, all at once. most debt collection agencies will gladly reduce the owed amount if you are actually going to pay it off.
you can. it’s called offering to pay less than you owe, all at once. most debt collection agencies will gladly reduce the owed amount if you are actually going to pay it off.
you absolutely can buy your own debt.
if you offer them a lump sum up front and they are already thinking of selling your debt and you offer above market value for your debt there is a good chance they take it. however they may say wtf why aren’t you using it to pay us lol so have a good excuse ready like your friend/family would be giving you the money for this
you absolutely can buy your own debt.
if you offer them a lump sum up front and they are already thinking of selling your debt and you offer above market value for your debt there is a good chance they take it. however they may say wtf why aren’t you using it to pay us lol so have a good excuse ready like your friend/family would be giving you the money for this
you absolutely can buy your own debt.
if you offer them a lump sum up front and they are already thinking of selling your debt and you offer above market value for your debt there is a good chance they take it. however they may say wtf why aren’t you using it to pay us lol so have a good excuse ready like your friend/family would be giving you the money for this
Latest Answers