Recently heard of a church purchasing $3.3 million in resident debt for 15k and then cancelling all of it.
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Debts have been made a commodity that is being traded in financial markets between different institutions. The debts are valued after what they think they can extract from them. For example if you have a $1000 credit card debt a company might figure they can spend $200 in phone calls, letters, investigations, etc. and still only get you to pay $300 of your debt. So they value the credit card debt to $100 and will pay this to your credit card company or whoever owns the debt.
The debt that this church bought were likely older debts to mostly very poor people and might have included a lot of late fees and such which would be hard to collect on. In order to collect on any of this debt you would have to spend quite a lot of resources and still not get much money from it. So the estimates for the debt were very low. This allowed the church to buy the debt for cheap but still could claim to have canceled lots of big debts. You see these kinds of PR stunts all the time.
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