Before buying anything, ask yourself this very simple question:
Am I going to use what I am buying or am I buying it to resell it to someone else?
Talking about debt buying, this question could be asked this way:
Am I going to try to collect this debt by myself, or ask a professional debt collector to do the job, or am I going to resell this debt to a third party with a markup?
If my goal is to collect by myself, I then must be a certified and registered debt collector, or a Lawyer and comply with my State regulations, and also most probably with the regulations of the State where the debtor who owes the debt I purchased is living or has his head office if it is a company.
I shall have to invest in time, letters, phone calls, emails, and possibly Court fees if a judgement is necessary to have the debtor pay what he owes me.
All these are expenses.
In this case my profit will be (if collection is successful):
(AMOUNT COLLECTED) – (PURCHASE PRICE) – (EXPENSES) = MY PROFIT
If I intend to hand over the debt I purchased to a debt collector so that he collects on my behalf, I shall have to pay a commission upon success, Court fees when necessary, and this will lower my profit:
(AMOUNT COLLECTED) – (PURCHASE PRICE) – (DEBT COLLECTOR FEES & EXPENSES) = MY PROFIT
I may decide to sell the debt I purchased without even trying to collect it. In a way a broker would do so.
This is of course only an option when I purchased the debt at a very low price compared to the face value.
My profit will be:
(SELLING PRICE) – (PURCHASE PRICE) = MY PROFIT
In any case, to buy a debt for pennies on the dollar I shall have to conduct due diligences and ask the seller for all available documentation and information related to the debt he sells, and this to protect myself from a bad investment.
I won’t make any firm offer without having checked at least Statutes of Limitation,
Debtcatcher.com is the best place to find sellers who are selling single debts or portfolios. You may negotiate with them without any third party. As simply as you would buy a pre-owned car on Craigslist.
You may even ask sellers to buy some accounts of their portfolios instead of having to purchase the whole portfolio as you would have to do in another context.