The place to sell and buy debts
Switch write off to pure profit
7,5%
Of all invoices remain unpaid worldwide
650
$ Billions shortfall in United States, $Bn60 in Germany, $Bn45 in France
80%
Of export unpaid receivables are charged off after 1 year overdue
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Why debt buying is a smart financial move
Debt buyers are companies that purchase debt from lenders at a discount and then attempt to collect it from the borrower.
The debt buying industry has grown in recent years as lenders have become more willing to sell debt, and investors have become more interested in buying it.
There are several reasons why debt buyers are willing to purchase debt for less than the full amount. One reason is that they can use special techniques, such as debt collection software, to locate and contact borrowers. Another reason is that borrowers often have poor credit scores, which makes it difficult for them to get new loans.
Debt buyers typically purchase debt for pennies on the dollar, and then attempt to collect the full amount from the borrower.
If they are successful, they can make a large profit. If they are unsuccessful, they can still sell the debt to another buyer or write it off as a loss.
The debt buying industry has come under scrutiny in recent years for its aggressive collection practices. However, it is still a thriving industry, and there are many companies that are willing to purchase debt.
Debt buying is the process of purchasing past-due debts from creditors at a discount.
The debt buyers then attempt to collect on the debt themselves, often using aggressive tactics.
The debt buying industry has grown significantly in recent years, as the market for non-performing loans (NPLs) has increased. This has led to concerns about the industry’s practices, as well as the impact of debt buying on credit scoring.
Despite the concerns, debt buying remains a popular way for creditors to get rid of NPLs. And, as the industry continues to grow, it is important to understand the realities of debt buying – as well as the potential benefits and drawbacks.
The debt purchase industry is one of the most important industries in the world.
It provides a critical service to businesses and individuals by purchasing debt and helping to collect on it. This industry has been growing rapidly in recent years, and it is expected to continue to grow in the future.
There are many reasons for this industry's growth. First, the world economy is becoming increasingly globalized. This means that more businesses are operating in more countries, and they are often dealing with customers who are located in different parts of the world. This can make it difficult for businesses to collect on their debts. The debt purchase industry provides a valuable service by purchasing these debts and then collecting on them.
Second, the growth of the internet and online commerce has made it easier for businesses to sell their products and services to customers located in different parts of the world.
The debt purchase industry is a thriving marketplace where buyers and sellers can come together to trade debt.
If you're looking to buy or sell debt, you can register as a buyer or seller on DebtCatcher.com. With so many buyers and sellers in one place, you're sure to find the right match for your needs.
The Main Causes of Debt in 2022
The debt collection market in the US continues to show resilience. The industry is currently estimated to be worth $14.99 billion, with Market Research forecasting an average growth of 2.8% per year that will place its valuation at $16.7 billion by 2025. It has led to an invigorated debt buying sector, with average collection firms generating $4.1 million worth of receipts annually. That's an incredible 78% increase from $2.3 million in 2007.
Major trends that drive growth include industry consolidation, business outsourcing, and innovations for collections such as artificial intelligence (AI) and the Internet of Things (IoT). Debt Catcher previously identified said factors as key changes that are happening now in the market. The last two, in particular, are instrumental in process alignment as they're part of systems and technology, which is vital for minimizing non-compliance.
Considering the outlook above, debt buyers are expected to have more viable opportunities moving forward. Businesses and consumers start to stimulate stronger economic activity after holding back at the height of the pandemic. With that in mind, let’s go through some of the variables below that are the main causes of debt this year.
Business Debt
Data from The Fed shows that business debt is at around $17.7 trillion. Businesses affected the most by the pandemic, like restaurants and retail companies, are the top borrowers as they continue to recover losses. Some have inevitably resulted in charged-off debts, creating opportunities for buyers.
As discussed in our post Where to Buy Debt Portfolios be sure to do your research before taking the next step. Determining factors such as your target's product, customers, and total amount for sale are vital to see if everything matches your objectives.
Medical Debt
In another article, we highlighted the research published by the Kaiser Family Foundation and explained how patient debt ends up getting sold by hospitals and medical providers. And given the present global situation, consumers are racking up medical expenses more than ever. A big chunk of the costs is left to healthcare institutions, especially from patients without insurance or HMO.
Credit Line
Credit issuers are also frequent debt sellers due to the fact that credit utilization goes up even if credit lines are decreased. A report from the Consumer Financial Protection Bureau notes that even among "super-prime" borrowers – or those with high credit scores – the utilization rate can reach 78% when available credit is reduced. If this happens, credit scores also tend to go down. Upgraded Points outlines that credit utilization is the biggest factor in determining credit scores. With credit lines on max limits and lower credit scores, it's harder to get additional funding. Ultimately, the chances of delinquency and having charged-off debts become higher.
Just remember that as you scour for credit debts to buy, check for the accuracy and validity of credit reports to avoid violations, especially with respect to the Fair Credit Reporting Act. We cited the case of Hinkle v. Midland where two charged-off debts were tagged as "verified" even with lack of documentation. If verification ends up inconclusive, the proper response according to the panel is to "delete the account or cease reporting it."
Commercial Mortgage
The outlook on commercial mortgages is positive this year, with a $733 billion circulation value expected among lenders and borrowers in this particular category. Jamie Woodwell of the Mortgage Bankers Association shares that “most commercial real estate market fundamentals remain strong." Loan demand from now until the next two years is anticipated to go up, and with it comes more prospects for debt buyers.
At the end of the day, no matter the options you're considering, keep in mind that buying debt starts with finding the right future sellers. Our platform can connect you with the best candidates to help ensure that you'll achieve a desirable ROI.
Debtcatcher.com shortlisted as a finalist at the 2022 Credit & Collections Technology Awards - Manchester UK
Manchester November 17th 2022
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