Buying your own debt ?

ging84

this only works with bad debts, good debts have a value equal or above the amount still owing.
The moment the lender gets wind that the borrower has the money to clear some of the bad debt, it ceases to be a bad debt, or at least not as bad as it was, so they would no longer want to sell it as cheaply
Those in debt are always able to negotiate a settlement with who they ow the money to, this would effectively become the same thing just approached from a different angle.

stephan200210

While I take all the above points, it seems, at the very least, there should be a MANDATORY element of disclosure as to the price debt will be/or has been sold at.


Having got into financial difficulties myself some years back, I managed to pay off (over a number of years) those credit card debts still held by the original issuer. This was only 3 out of 8, I might add.


The remaining debts were sold - to the usual suspects. And I cannot bring myself to pay them "in full" knowing they would make a huge profit out of me.


My starting point in any negotiation is to ask them - "what did you pay for the debt"? And I know they could at best, as debt is bundled, give only an approximation, but it would be better than nothing. So, for example, if they said "we paid 25%", then I could offer them, say, 50% of the TOTAL AMOUNT and they would make a 100% profit on the debt they bought. Seems like a win all round.


But of course, they make no disclosure, I make no payments, and we are stuck in limbo. With me just waiting for a year or so more to expire so the debts become statute barred.


At the VERY VERY least, in any court action, I think a judge should MAKE creditors disclose how much they paid for a debt and then use that figure to FORCE the parties to settle.

antrobus

stephan200210 wrote: »

....The remaining debts were sold - to the usual suspects. And I cannot bring myself to pay them "in full" knowing they would make a huge profit out of me. ....

Which would balance out the 'huge loss' the original owner made by lending you the money in the first place.

I doubt very much that the financial system as a whole will have made a penny profit out of lending to the kind of 'deadbeats' whose debt is now being traded at 2p in the pound.

stephan200210

With all due respect to Antrobus, I did pay IN FULL the original lenders who kept ownership of the debt. So they made a profit and have money to lend again. They did not make a loss.


The lenders who made a loss (but of course can take a tax write off) are the ones who sold on the debt. And that was their choice. And if they had offered the debt to me I would have no doubt been able to borrow funds to pay "a bit more" than they got by selling my debt to the "debt vultures". And of course the debt vultures do not lend. All they do is provide a bit of liquidity in the secondary market - a valuable service I admit. Finally, it is NOT my responsibility to ensure the financial system as a whole makes a profit. In fact, one has to fight them - constantly and tooth and nail - to guard against all the rip offs they perpetrate.

N1AK

Generali wrote: »

Errm, well actually that's exactly what I'm saying.

Just re-read and it looks like I misunderstand Michaels posts. I was referring to the lending market (which wouldn't be killed) but you were both discussing the secondary debt market; which I agree would be destroyed by this. Sorry for confusing things!

Generali

N1AK wrote: »

Just re-read and it looks like I misunderstand Michaels posts. I was referring to the lending market (which wouldn't be killed) but you were both discussing the secondary debt market; which I agree would be destroyed by this. Sorry for confusing things!

No problemo .

The thing with ideas like this is that they look really simple on the face of it but once you actually get into the detail it's rather more complex.

The market for consumer debt is pretty efficient because it's simple and rules are predictable. IMHO at least.

antrobus

stephan200210 wrote: »

With all due respect to Antrobus, I did pay IN FULL the original lenders who kept ownership of the debt. So they made a profit and have money to lend again. They did not make a loss. ....

If you paid the original lenders "IN FULL" then there would be no remaining debt to sell on, and so there would be nothing for you to buy.

stephan200210

In response to Antrobus, I paid IN FULL those creditors (small minority) who hung onto the debt and did NOT sell it on. Hence, I agree, they had nothing to sell on. And they got their money back, in full, and now can lend it on to others.


But I draw a real distinction (moral and legal) between paying back someone who actually lent me the money and some 3rd party with whom I have no relationship at all and who paid pennies in the pound to acquire the debt.


And it is also a question of "asymmetric information". They ask me all sorts of questions as to my assets, liabilities, income etc., but when you ask them "how much did you pay for my debt" then they refuse to tell you. But surely, when I am negotiating a repayment plan with a third party debt purchaser, I am negotiating with less than full information if I do not know how much they paid for the debt? And surely, at the very least, it is public policy to ensure that consumers (even debtors) have full information.


As above, I draw a real distinction between those that lent me money in the first place and those that effectively "wash their hands of it" by selling on the debt to a third party. I have no sympathy for that third party and feel no obligation to do anything but settle, if I can, for the bare minimum.

N1AK

stephan200210 wrote: »

And it is also a question of "asymmetric information". They ask me all sorts of questions as to my assets, liabilities, income etc., but when you ask them "how much did you pay for my debt" then they refuse to tell you. But surely, when I am negotiating a repayment plan with a third party debt purchaser, I am negotiating with less than full information if I do not know how much they paid for the debt? And surely, at the very least, it is public policy to ensure that consumers (even debtors) have full information.

You are contractually bound to repay the debt. The company is asking you those questions because it is considering whether to let you pay them less instead. If you don't want to provide the information you are under no obligation to do so.

You don't have the right to full information. If you did then you would have the right to know the exact minimum amount they would settle for, and you don't. Tesco doesn't tell me how much they pay for their own brand beans, or what the logistics cost for getting them to a store etc etc are and have no obligation to do so either.

antrobus

stephan200210 wrote: »

In response to Antrobus, I paid IN FULL those creditors (small minority) who hung onto the debt and did NOT sell it on. Hence, I agree, they had nothing to sell on. .....

Ah, so you only paid a "small minority" of your creditors IN FULL.:)

stephan200210 wrote: »

...But I draw a real distinction (moral and legal) between paying back someone who actually lent me the money and some 3rd party with whom I have no relationship at all ....

I don't. And what's more the law doesn't either.

stephan200210 wrote: »

..and who paid pennies in the pound to acquire the debt. ....

If they only "paid pennies in the pound to acquire the debt" then the original lender would indeed have suffered a 'huge loss' by lending you the money in the first place, and my original point stands.

stephan200210 wrote: »

..And it is also a question of "asymmetric information". They ask me all sorts of questions as to my assets, liabilities, income etc., .

That's because there has been "asymmetric performance" of the contract. The lender kept to their side of the bargain. You didn't.