How is it profitable at all to auction debt for pennies on the dollar?
In: Economics
It isn’t. I mean, not in comparison to collecting in full on all the debt.
But of course realistically speaking nobody is going to be able to do that. A bunch of that debt isn’t going to be possible to collect on because the person who owes it simply doesn’t have the money.
However *some* of the debts might be able to be settled for some fraction of the overall sum. Figuring out which those are is quite the task and something the current owner doesn’t want to bother with. So they have a choice: Give up on all the debts, or sell it for some fraction of the overall amount to someone willing to put in the work to salvage as much as possible. No money compared to some money is an easy choice.
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