Debt collection agency - what do THEY pay?

MJI1962

I have been threatened wih my debt being sold. How much would a DCA pay for that debt - rough figures please?

gax23

You haven't told us how much the debt is, so we can't really answer that. It'll be a LOT higher than it is now, that's for sure.

anniecave

A debt collection company would only pay a fraction of the debt. Lots of debts will get sold on at once and it will just be a figure based on how likely it is that the debts will ever be repaid. The amount paid would be less if the debt is old, more if the debt is newer for example. If the debt is sold, this represents a legal change of ownership of the debt, the debt passes from the original company to the debt collection company. This is a financial transaction between the two companies and doesn't affect the value of the debt as such.

The company that the debt is sold on to will still pursue you for the amount you owe, plus they may add on interest or charges for scare tactics or to get extra money etc.

At some stage during the collection process (whether or not the debt gets sold on) it may affect your credit rating, if it hasn't already, so be aware of this.

If it is a debt that you dispute for some reason, you'd be better off talking to the original company so you can try to get the issue resolved. If you can't afford to pay the debt, similarly I would talk to the company as they may be able to offer you payment terms.

MJI1962

I have already written to them explaining that I will not deal with anyone but them. I have also mentioned I am trying to get final value figures to pay them all off!

CLAPTON

seems to me you are shooting yourself in the foot... its nearly always easier to get a better (lower) full and final settlement from a DCA than the original lender

MJI1962

CLAPTON wrote: »

seems to me you are shooting yourself in the foot... its nearly always easier to get a better (lower) full and final settlement from a DCA than the original lender

For a fresh debt that doesn't seem too likely, I offered each card about 20% lower to see what happened all were rejected.

NickX

Once the debt is sold on, there isn't much point in going back to the orginal lender as they effectively been paid a final amount for the debt.

To get a "Full and Final settlement", you need to give the impression that they are going to struggle to get paid in full (for example if bankruptcy was looming). This means that payments need to go into arrears, and you have probably requested much lower monthly payment amounts.

If the company feels that they would save time and expense by taking a reduced settlement, then they may accept "Full and Final settlement".

Remember that defaulting and going into arrears will cause your credit rating to drop significantly for up to 6 years.

mupegasus

Negotiate with DCA, you will suprisingly get lower repayment rate

tupperware

Obviously it depends on circumstances but as far as i'm aware the majority pay around 20% for a debt.

Tribulation

tupperware wrote: »

Obviously it depends on circumstances but as far as i'm aware the majority pay around 20% for a debt.

I wonder how many people that end up in debt due to illness/redundancy etc (rather than just overspending) could have managed to pay back say 30% of their debt if given the chance, rather than the bank/whoever selling it for around 20%?

Having been through illness and having my debts managed with the help of the CAB, the debt collecting agencies were often completely out of order, the worst reducing my wife to tears, personally we could have managed to pay off 30% of our debt when it first became obvious my health was going to be bad for a while.

You'd think that when people are in this sort of situation, it makes sense for the banks etc to try to help them? If a bank etc is prepared to write off about 80% of the debt by selling it, surely it would make more sense for them to freeze around 80% of the debt and just let person in difficulty concentrate on the remaining 20% until that person is back in employment?

CLAPTON

Tribulation wrote: »

I wonder how many people that end up in debt due to illness/redundancy etc (rather than just overspending) could have managed to pay back say 30% of their debt if given the chance, rather than the bank/whoever selling it for around 20%?

Having been through illness and having my debts managed with the help of the CAB, the debt collecting agencies were often completely out of order, the worst reducing my wife to tears, personally we could have managed to pay off 30% of our debt when it first became obvious my health was going to be bad for a while.

You'd think that when people are in this sort of situation, it makes sense for the banks etc to try to help them? If a bank etc is prepared to write off about 80% of the debt by selling it, surely it would make more sense for them to freeze around 80% of the debt and just let person in difficulty concentrate on the remaining 20% until that person is back in employment?

Although I understand what you are saying, the reality is that its very very rare for the original lender to write any part of the debt off.
In cases of difficulty they may freeze interest etc for a while and sometimes for long periods but very very rarely actually offer F&F settlements. The reasons are obvious.
However, once it goes to a DCA it gets easier to negotitate a F&F and once the debt is actually sold its pretty certain they will eventually accept a F&F. Remember that lots of debts with DCAs aren't actually sold to them initially and its only after a year or so that they are really sold.