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Some purchased debt is "zombie debt" where the legal time limit to sue for collection has already expired.
Debt buyers buy portfolios of "bad" debt—accounts the original creditor has written off as a loss. For example, a buyer might purchase $1,000 of debt for only $50. make money buying debt
An extensive report by the Federal Trade Commission (FTC) examining how the industry operates, the types of debt purchased (mostly credit card debt), and the data buyers receive. Some purchased debt is "zombie debt" where the
A report from the Consumer Financial Protection Bureau (CFPB) detailing how debt portfolios are traded on online marketplaces. An extensive report by the Federal Trade Commission
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Once the buyer owns the debt, they attempt to collect as much as possible. Because their initial cost was so low, recovering even a small portion of the total face value can lead to significant profit.
Unlike original lenders, debt buyers often have more flexibility to negotiate. They may offer settlements where the debtor pays only a fraction of what they owe, which still results in a profit for the buyer. Risks and Regulations