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Tobin O'Conner & Ewing Practicality in Practice
  • ~ Washington DC Business Law Attorneys ~

Selling Your Debt: Possibly Good For The Bottom Line, But Definitely Bad For Your Reputation

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It’s annoying to get phone calls from companies with which you have an unpaid past-due balance, but you know on some level that, by running up a bill with them, you were implicitly promising to pay it.  When a collection agency calls you to pester you about a debt, though, rage is a natural reaction.  Not only did you never buy anything from them, but you never gave them your contact information; you never consented to owing them money.  If collection agencies are so horrible, why do they exist?  Someone must be paying them enough to keep them in business.  Consumers despise collection agencies, but some businesses consider them a necessary evil.  Collection agencies are only the most public-facing part of the debt buying industry, a whole ecosystem that thrives on the fact that millions of consumers have bills they can’t pay.  If you are considering selling debts owed to your business to a debt buyer, a Washington DC business law attorney can help you decide if it is the best option, and if it is, your lawyer can help you navigate the process.

Why Would Anyone Want to Buy Debt?  Why Would Anyone Want to Sell It?

They say that one person’s trash is another person’s treasure, but why would someone buy debts that the borrower has demonstrated an inability to pay?  Across the country, many thousands of companies are in the business of buying unpaid consumer debts from businesses.  The debt buyer usually pays a lot less for the debt than its face value; the debts are typically many months overdue, or even more than a year, and the business has little hope of collecting them.  For example, a debt buyer might pay $300 for a $2,000 debt; the business owner is happy, because getting $300 from a debt buyer is better than getting nothing from the consumer, which is what has been happening for the past year.

Once the debt buyer has bought the debt, they try to get a return on their investment, which they might do by reselling the debt for a slightly higher price to another debt buyer.  They might also try to collect as much as they can from the consumer, in the hopes that the consumer will pay as much as the debt buyer paid.  The bad news is that, when a collection agency that bought debt from you contacts the consumer, the consumer will blame you.  You are in a position to decide whether you would rather have the goodwill of a customer who can’t pay or whether you would rather have a debt buyer pay you a fraction of what the customer owed.

Reach Out to Us Today for Help

A Washington DC small business attorney can help you decide whether selling your debts to a debt buyer is worth the risk to your reputation, and if it is not, what you can do instead of selling your debts.  Contact Tobin, O’Connor & Ewing for help with your case.

Resource:

blog.trueaccord.com/2020/06/selling-your-debt-vs-hiring-a-debt-collection-agency/

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