How is it profitable at all to auction debt for pennies on the dollar?
In: Economics
debt is promised money, they don’t have it yet and you might default on it. if they’re auctioning off your debt then you’ve already defaulted and they don’t expect to make it back, so they sell your debt to someone. bank recoups some losses.
pennies on the dollar is money now. i settled an old debt of 10k for 2k. they’d much rather have something now than the promise of something later.
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