badgenome said:
That's almost like saying collectors are taking the bank's business away, though. Banks have given up by the time they actually sell debt to collectors (vs. just hiring the collectors to collect), and those collectors have given up by the time they are willing to sell it to other collectors at this low of a rate. |
| badgenome said: Of course they do, but OWS is buying debt for about 5 cents on the dollar. That's a pretty good indication that this debt belonged to people who were not making payments and were never going to. Especially if it's debt that a collection agency bought from a bank and the collectors themselves are now throwing their hands up. They're just getting some money where they previously would have gotten nothing. Not exactly undermining the system or anything; quite the contrary. |
Not quite. Original creditors often enter into contracts with debt buyers called forward-flow agreements, wherein they agree to sell large portfolios theoretically worth $X years in advance. The process is highly automated: many of the accounts are worthless, but a large chunk have real value, which is why debt buying is quite a profitable industry. The accounts can vary in age from a few years to just a few months: it's the financial version of hobo stew.
Basically, don't be too hasty in assuming the purchased accounts were worthless, or that serious efforts to collect were undertaken by the bank, let alone a collection agency. Admittedly, it is likely that these particular accounts went through at least one debt buyer first, but that's actually fairly routine in the industry even for accounts with value in them. You're giving the collectors too much credit here.
