Bad Debt Buyers Dealing With Shrinking Supply of Debt to Buy

Another reinforcement to the unfortunate trend of negative signs that are impacting the demand for debt relief services has emerged.

According to Collections & Credit Risk, bad debt buyers are finding it harder to purchase debt as the supply of bad debt shrinks.

A more limited supply is driving up costs for debt buyers just as shrinking levels on consumer bad debt are impacting debt relief providers.

The cause of this shrinking pool of bad debt is attributed to lower levels of charge off by the issuers.

“We have seen prices north of 12 cents for some portfolios,” says Aaron Hadam, a vice president at National Loan Exchange Inc., a delinquent debt broker. “The pricing will vary by portfolio type, but prices for the freshest paper will be the highest, because with originations down there are fewer accounts charging off.”

Prices for secondary and tertiary paper are averaging between two and four cents depending on the quality, with highs for secondary portfolios reaching five to six cents. Prices are fluctuating by issuer, product type and underwriting criteria.

The upswing in prices for fresh chargeoffs is giving some buyers reason for pause. Schacter says his firm will no longer bid above 10 cents. – Source

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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