Does anybody here know how much CA's pay to buy debts from other companies? Do they get the account and give a percent to the OC after they collect or is it bought beforehand? just curious?
The answer is--it depends. If they are just collecting for the OC, they will get a percentage of what they collect. If they are buying it, they will pay a certain amount for it. The amount depends on many things, including how old the debt is and how much documentation goes with it. And they usually buy portfolios, not individual accounts.
Thanks, I started fixing my credit about 9 years ago using this site. It was a great help. I am getting back in it to fix my wife's. Just was always curious about that. I figure a CA that has paid for something would work harder to collect than one who was just assigned an account.
The numbers I've seen are: for an assignment (i.e. the OC still owns the account), the CA might get 50% of the amount. for a purchase, it depends on the quality of the debt and the current market conditions. For relatively recent debt, it might be 20-30 cents on the dollar, for older, recycled debt (i.e. debt that has already been through a few collection agencies) it might be as little as 5-10 cents on the dollar. Based on these numbers, I'd think they'd be more inclined to pursue the assignments over the purchased debt because there's a greater liklihood of collection. That makes their income and collection ratio look good. Purchased debt (a.k.a. "junk" debt) is usually sent through a mill: either they carpet bomb letters and ding the credit reports or they have a staff of paralegals flood small claims court with suits. Either way, it's likely a mass-production effort to keep the cost of collection low and the liklihood of a return high.
