Debt buyers are buying back large portfolios of bad debts from credit card issuers. They take risks and do not always profit from the acquired debts.

A debt buyer: what’s this?

If you have never encountered debt buyers before, then you should know that these are companies that buy delinquent debts for pennies on the dollar. These companies are also known as “junk debt buyers” so you may come across the abbreviation “JDBs”.

So, if you cannot pay off your debt, the lender deducts money from your bank account, which means that it is listed as a loss for him. Of course, over time, creditors may try to collect debt from you through traditional means, such as an in-house collections department or a collection agency (which will try to collect the debt on their behalf). However, as a result, lenders may decide to sell your account in a portfolio of charged-off debt to another company. After they have done this, the company will pay them for your debt, which means that creditors will be able to recover at least part of their losses.

Surely you are also interested in the cost of buying debt. It often ranges from $ 0.04 to $ 0.14 for every dollar. Thus, if your debt is, for example, $ 1000, and the buyer of the debt buys it for ten cents a dollar, then he can pay $ 100 in order to buy back your debt. Of course, you still owe $ 10,000, but you will no longer pay this money to your creditor, but to the buyer of the debt. Thus, all the money they receive in excess of the $ 1000 they paid will be their income.

Of course, the buyer of the debt, like your lender before, will try to collect your debt. Sometimes they use third parties to collect the debt, and sometimes they resell your debt as part of another portfolio. Thus, your overdue debt can be sold several times.

How does debt buying work?

So after you know about debt buyers you need to understand how it works. Of course, debt buyers don’t buy debt separately, they buy back large portfolios of bad debts from credit card issuers. Thus, many credit card issuers in the United States use debt purchases to recover at least some of the outstanding debt. Most often, they receive about 5% of the total, but this at least slightly reduces their costs.

Of course, debt buyers are at risk when buying this portfolio, as they often include various levels of overdue debts. Also, buyers of debt are not always able to profit from the debt they have acquired. Thus, they can resell the portfolio to another buyer of the debt.

What does it mean to you if your debt is sold?

Many consumers think that there is no significant difference between who is owed – the creditor or the buyer of the debt, but there are some differences that you should pay attention to.

The first thing you should know is that when an account is submitted to a third party in your credit report, you create a collection account. This will update your original account balance to $ 0 as you no longer owe money to the original lender. Note, however, that the new collection account will remain there for seven years from the time the original account first became expired. Of course, this situation will reflect badly on your credit. If you have collections accounts, this makes you a risky borrower for those lenders who look at the credit report for a loan. Also, you should be aware that this account will also negatively affect your credit score and you will face higher interest rates in the future. Remember that even after you have paid a collection account in full, it will still be kept in your credit account for 7 years.

However, there is a positive side to paying two off the buyer of the debt, as you can usually negotiate a lower interest rate to pay off the debt.




Material Disclosure Notification serves solely as a bridge between borrowers and a network of lenders. We do not create loan agreements, make credit evaluations, or handle loan brokerage. Our platform does not impose service fees on users and is not an advocate for any participating lender of short-term loans. When you submit a request for a loan through our system, we facilitate the connection to independent lenders but do not assure a loan proposal will be made. Approval for a short-term loan via our website is not guaranteed. Lenders may perform credit inquiries with credit reporting bodies or receive credit reports from other sources. Lenders may request reports from major credit bureaus like Equifax, Experian, and TransUnion, or they may use other alternative credit information sources. Use of our website is entirely voluntary, and you are not required to engage with any lender or third party nor enter into a contract. The information provided here is for educational purposes and is not to be interpreted as legal counsel.

Clarification on Agency Role Please be advised that is not a lending institution, does not issue loan offers, and is not engaged in the online loan brokering to lenders. We do not act as an agent or as a representative of any lender, nor do we take part in making credit decisions. Submitting a loan inquiry through our platform does not ensure that you will receive a loan offer or be approved for a loan. Some participating lenders might ask for documentation to be faxed. In certain cases, it might be necessary to visit a physical location to finalize your loan request process. Should you have queries regarding your loan, it is recommended to contact your lender directly.

APR Notice

State regulations may cap the Annual Percentage Rate (APR) that lenders are allowed to charge. APRs for different types of loans vary significantly. For cash advance loans, APRs may range from 200% up to 1386%, for installment loans the range is 6.63% to 485%, and for personal loans, APRs can be from 4.99% up to 450%, with variations depending on the lender. In states without APR restrictions or when borrowing from banks not subject to state regulations, the APR may be higher. The APR represents the annual cost of your loan, taking into account the total charge, the loan amount, the loan duration, repayment schedules, and the timing of payments. Before finalizing a loan agreement, lenders must disclose the APR and other loan terms to you by law. Please note that APRs are variable and may change.

Disclosure of Operations

This website is operated by a company that is not a direct lender, loan broker, or a representative of either. Our role is as a marketing referral service working with various lenders who may offer loan amounts ranging from $100 to $1,000 for cash advance loans, and even up to $35,000 for personal loans. The maximum amounts may not be available from all lenders, and there is no certainty that you will be matched with an independent lender who can meet your borrowing needs. This platform does not make loan offers but rather connects users with lenders. We do not charge for any product or service, nor do we represent any lender. Compensation may be given to us by lenders for advertising their services. We do not have any influence over lender actions and do not have access to full loan details, including APRs. Your lender is the best source for information about your loan terms, rates, fees, repayment schedules, and the implications of missed payments. Your registration details submitted here will be forwarded to one or more lenders. You are not required to engage our services to make contact with a lender, apply for credit, or accept a loan. Each lender's money transfer and repayment terms will vary, and state and local laws may govern repayment terms. Some lenders may require faxing of documentation. Please consult our FAQs for further information on credit and payment delays. These disclosures are informational and should not be considered legal counsel. This service's use aligns with this site’s Terms of Use and Privacy Policy.

Service Exclusions

Certain state residents may not qualify for short-term, small-dollar loans. Specifically, those from Arkansas, New York, New Hampshire, Vermont, and West Virginia are not eligible to use this service. The states where this service is available may change without prior notification.

Credit Considerations

This website’s operator is not involved in making credit decisions. Lenders you may connect with through this service might perform credit checks with credit reporting bureaus or obtain alternative reports to assess credit history, credit standing, and credit capacity. By submitting your details, you consent to allow lenders to verify your information and check your credit as needed. The loans offered by lenders in our network are intended for short-term financial relief and are not long-lasting financial solutions. Only take out a loan if it can be paid back by the upcoming pay cycle. For long-term financial health, it's advisable to seek out professional financial guidance. Failing to repay loans on time may result in additional fees or collection activities. Every lender sets their own policies, so please review them for more information. If you do not repay your credit as agreed, lenders may pursue collection actions. Each lender's policy on loan renewal varies, so it's important to read and understand their terms.