Should You Sell Your Debt to a Debt Purchasing Agency?

20th November 2020

If you have been owed money for a while and have very little confidence that you will ever see any of that money again, selling the debt on to a debt collection agency can seem very appealing.

You get a quick injection of cash and can wash your hands of the debt. It seems like a great solution.

But in reality, you could be missing out on significant revenue by settling for such a small fraction of the original debt.

What is Debt Purchasing?

Some agencies offer Debt Purchasing services. After doing some due diligence to make sure there is proof of your debts and they are not too old to chase, the agency will offer you a small percentage of the full debt amount – sometimes as low as 5% (so if you are owed £1,000 you would only see £50 of this).

If you agree to the terms, you will get this money up front and lose any right to pursue the full debt amount. At this point, the agency will start chasing your debtor (or rather, their new debtor) for as much of the full balance as they can get.

Is Debt Purchase worthwhile?

Selling debts will give you cash in hand immediately. But this will be far, far less than the full debt balance and might not even cover the interest built up by the debt being owed, let alone the cost of chasing it up to that point.

Since agencies pay so little for these debts, they will usually offer settlements to debtors for a 50% or even 70% discount of what they originally owed and will do little beyond sending occasional letters. Collection rates are low, and debtors are let off very lightly, having little incentive to pay in full and on time in future.

Debt Recovery vs Debt Purchase

Direct Collection Bailiffs LtdWhen you instruct a debt collection agency like DCBL rather than selling the debt, the debt remains yours. We look to recover the debt amount in full on your behalf and return this to you minus our commission, which is often offset by late payment fees and interest. The amount you’ll get back will be several orders of magnitude higher than if you were to have sold the debt on.

Even if you have been chasing a debt for a long time to no avail, it’s very likely DCBL will be able to collect the money successfully for you. Our brand awareness gained from featuring on TV’s “Can’t Pay? We’ll Take It Away!” and our meticulous methods, including in-person agent visits, give us very high success rates.

The process is very straightforward. Once you agree to proceed with us, we will do all the legwork of recovering your money.

We also offer a free consultation on each case and will tell you up front if we feel your debt is uncollectable so as not to waste your time or money.

So, if you are thinking about selling your debt to a debt purchasing agency, consider the advantages of instructing a debt collection agency to recover the full debt amount instead.

Click here to get started with a free consultation and quote for debt recovery now.