Recently heard of a church purchasing $3.3 million in resident debt for 15k and then cancelling all of it.
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This sometimes also works for private persons.
I helped out an elderly guy who was close to retirement and didn’t have much income. He had about 10.000€ of dept at his ( private) bank for a longer priod of time ( about 10 years) but never paid money back. Then we set up a letter that due to a friend, who would be willing to lend him 3000€, he would be able to forward the money to the bank when they’d be willing to cancel the balance of 7000€ otherwise he would declare bankrupcy and they wouldn’t get a penny ever. They accepted and he’s now dept free.
Banks calculate different from how private people do. Every time, the dept has to be handled ( accouting, writing letters, costs for lawyers etc), it costs them money. So they calculate for example” 10 more years of trying to get everything back is more expensive than take the fast buck and forget about the rest”.
And this is the same reason, why this business exists.
This sometimes also works for private persons.
I helped out an elderly guy who was close to retirement and didn’t have much income. He had about 10.000€ of dept at his ( private) bank for a longer priod of time ( about 10 years) but never paid money back. Then we set up a letter that due to a friend, who would be willing to lend him 3000€, he would be able to forward the money to the bank when they’d be willing to cancel the balance of 7000€ otherwise he would declare bankrupcy and they wouldn’t get a penny ever. They accepted and he’s now dept free.
Banks calculate different from how private people do. Every time, the dept has to be handled ( accouting, writing letters, costs for lawyers etc), it costs them money. So they calculate for example” 10 more years of trying to get everything back is more expensive than take the fast buck and forget about the rest”.
And this is the same reason, why this business exists.
Whomever held the debt basically wrote it off as unrecoverable — after a certain number of years, repeated attempts to collect, submission of derogatory marks to credit bureaus of late and non-payments, etc. they just write it off as a loss. Usually, such debt gets sold off to debt collectors who then try to collect more of the debt than they paid for it. Maybe in another scenario, that $3.3m in debt gets bought by a debt collector for $15k and then they hope to collect $30k or $45k from it by harassing the people in debt until some cough up some money. In thi
Who says what somethings worth. If I want to sell you a huge gold ring 1$ why should you be forced to say no? I might want to sell low for some reason (It’s the one ring and the ring wraiths are coming). In the case of debt although the debt is “worth” 3.3 million you are never going to get 3.3 million dollars. Lets say 100,000$ of that debt is owed by a 91 year old with stage 4 cancer with basically no assets. If you manage to get 0.05$ on that 100k you will be doing very well. More over it will probably cost you over 1000$ to get that 0.05$; you are going to need to go to probate court when they offs it and present your case. So that 100k is literally worthless. There might also be a very poor person with 200K in debt. You might be able to get them to pay back 2K. If you go for more they will declare bankruptcy and get all the debt discharged, then you get nothing. All the debt in this 3.3 million pool will be like this.
My guess is that of that 3.3 million about 3% or 99,000$ is actually recoverable, and recovering it will take a lot of time and money. The people who hold the debt now are not debt recover specialist and as such probably could not recover any money. Therefor they sell it to someone who is, so they get at lest the 15K. The debt collector then spends maybe another 50K collecting the 99K for 34K in profits.
Whomever held the debt basically wrote it off as unrecoverable — after a certain number of years, repeated attempts to collect, submission of derogatory marks to credit bureaus of late and non-payments, etc. they just write it off as a loss. Usually, such debt gets sold off to debt collectors who then try to collect more of the debt than they paid for it. Maybe in another scenario, that $3.3m in debt gets bought by a debt collector for $15k and then they hope to collect $30k or $45k from it by harassing the people in debt until some cough up some money. In thi
Who says what somethings worth. If I want to sell you a huge gold ring 1$ why should you be forced to say no? I might want to sell low for some reason (It’s the one ring and the ring wraiths are coming). In the case of debt although the debt is “worth” 3.3 million you are never going to get 3.3 million dollars. Lets say 100,000$ of that debt is owed by a 91 year old with stage 4 cancer with basically no assets. If you manage to get 0.05$ on that 100k you will be doing very well. More over it will probably cost you over 1000$ to get that 0.05$; you are going to need to go to probate court when they offs it and present your case. So that 100k is literally worthless. There might also be a very poor person with 200K in debt. You might be able to get them to pay back 2K. If you go for more they will declare bankruptcy and get all the debt discharged, then you get nothing. All the debt in this 3.3 million pool will be like this.
My guess is that of that 3.3 million about 3% or 99,000$ is actually recoverable, and recovering it will take a lot of time and money. The people who hold the debt now are not debt recover specialist and as such probably could not recover any money. Therefor they sell it to someone who is, so they get at lest the 15K. The debt collector then spends maybe another 50K collecting the 99K for 34K in profits.
Whomever held the debt basically wrote it off as unrecoverable — after a certain number of years, repeated attempts to collect, submission of derogatory marks to credit bureaus of late and non-payments, etc. they just write it off as a loss. Usually, such debt gets sold off to debt collectors who then try to collect more of the debt than they paid for it. Maybe in another scenario, that $3.3m in debt gets bought by a debt collector for $15k and then they hope to collect $30k or $45k from it by harassing the people in debt until some cough up some money. In thi
I looked around and found this:
[https://www.cnn.com/2019/06/27/health/church-medical-debt-trnd/index.html](https://news.yahoo.com/church-buys-cancels-medical-debt-213100578.html)
It explains it fairly well:
“When people don’t pay debt, after a while it gets placed with collection agencies, and the debt accumulates. RIP is able to buy the debt at a reduced rate from hospitals, doctors, and even investors – who typically purchase debt at reduced rates, say 15%, and will require the debtor to pay them maybe 30%, turning a profit for the investor.”
The charity, RIP Medical Debt, purchases debt usually for around 1 cent on the dollar, and it’s after companies (usually several of them in succession) have exhausted all efforts to collect on the debt. By that point, the debt is worthless as it won’t be repaid.
I looked around and found this:
[https://www.cnn.com/2019/06/27/health/church-medical-debt-trnd/index.html](https://news.yahoo.com/church-buys-cancels-medical-debt-213100578.html)
It explains it fairly well:
“When people don’t pay debt, after a while it gets placed with collection agencies, and the debt accumulates. RIP is able to buy the debt at a reduced rate from hospitals, doctors, and even investors – who typically purchase debt at reduced rates, say 15%, and will require the debtor to pay them maybe 30%, turning a profit for the investor.”
The charity, RIP Medical Debt, purchases debt usually for around 1 cent on the dollar, and it’s after companies (usually several of them in succession) have exhausted all efforts to collect on the debt. By that point, the debt is worthless as it won’t be repaid.
I looked around and found this:
[https://www.cnn.com/2019/06/27/health/church-medical-debt-trnd/index.html](https://news.yahoo.com/church-buys-cancels-medical-debt-213100578.html)
It explains it fairly well:
“When people don’t pay debt, after a while it gets placed with collection agencies, and the debt accumulates. RIP is able to buy the debt at a reduced rate from hospitals, doctors, and even investors – who typically purchase debt at reduced rates, say 15%, and will require the debtor to pay them maybe 30%, turning a profit for the investor.”
The charity, RIP Medical Debt, purchases debt usually for around 1 cent on the dollar, and it’s after companies (usually several of them in succession) have exhausted all efforts to collect on the debt. By that point, the debt is worthless as it won’t be repaid.
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