Trying to make sense of this debt issue

[DYLAN150]

Why would a Bank sell my debt to a Junk Debt buyer for pennies on the dollar when I have offer to pay them one half of what I owe them over 36 months? Example, if I owe them 10K, I will pay them 5K over 36months to settle. Look's like they want it all or nothing. But I am only 90 days late. Maybe time will tell. A professional judgment collector told me that once a judgment is 24-30 months old they will settle for 25% of the judgment. Once a judgment get past 4 years old, settlement is very very rare.
Maybe time is on my side.

[jacko]

Save your dough. And go on with life.

Why would a Bank sell my debt to a Junk Debt buyer for pennies on the dollar when I have offer to pay them one half of what I owe them over 36 months? Example, if I owe them 10K, I will pay them 5K over 36months to settle. Look's like they want it all or nothing. But I am only 90 days late. Maybe time will tell. A professional judgment collector told me that once a judgment is 24-30 months old they will settle for 25% of the judgment. Once a judgment get past 4 years old, settlement is very very rare.
Maybe time is on my side.

[treehugger1]

LOL! Save your dough as suggested by Jacko! I sometimes think I must have been in some kind of sweet spot about 18 months before the financial crisis hit. Maybe the reason no big CC's immediately went after me was because the money was flowing from the mortgage industry and derivatives markets. At the time, 2007 - early 2008, my "measly" amount of debt probably didn't account for much. By the time my debts had charged off, the debt collection and financial industries were in self-defense mode. I believe a great many of my accounts got dropped in the cracks for "lower hanging fruit." What is my point? Well, there are some very reasonable models used by the CC companies and JDB's. They know some accounts will cost them cash, but many will gain them cash and/or assets. They play the numbers, and I believe the nnumbers are on their side. I'm not one of the numbers. Perhaps you are not one of the "numbers." Who knows, but save your freaking cash before you give it away. Just an opinion...

[AngelinaCatHub]

LOL! Save your dough as suggested by Jacko! I sometimes think I must have been in some kind of sweet spot about 18 months before the financial crisis hit. Maybe the reason no big CC's immediately went after me was because the money was flowing from the mortgage industry and derivatives markets. At the time, 2007 - early 2008, my "measly" amount of debt probably didn't account for much. By the time my debts had charged off, the debt collection and financial industries were in self-defense mode. I believe a great many of my accounts got dropped in the cracks for "lower hanging fruit." What is my point? Well, there are some very reasonable models used by the CC companies and JDB's. They know some accounts will cost them cash, but many will gain them cash and/or assets. They play the numbers, and I believe the nnumbers are on their side. I'm not one of the numbers. Perhaps you are not one of the "numbers." Who knows, but save your freaking cash before you give it away. Just an opinion...

Good advice. I will assume you are not attempting to bk? If I am wrong, you really want to stop paying on all unsecured debt, and secured debt you wish to abandon. If you are wishing to just settle out and not bk, then time will pay off and they will accept less. GET IT IN WRITING for TOTAL PAID OFF, or you just may be robbed. 'Hub

[catleg]

I think the idea is that your normal payment on a $10 k debt might be as little as 2% a month, or $200, of which 75%-90% is interest, so if you can afford 5000/36 months (about 150/month) they'd rather get you "back on the hamster wheel" of regular payments so you never get out from under.
I think this is why there is so little actual debt settlement. If you've got enough to settle then you've got enough to make minimum payments.

P.S. And I agree that it doesn't make sense to sell the debt for pennies on the dollar, but I assume there is some business logic that makes carrying around old debts very unfavorable to them. Many of the major junk debt buyers are partially owned by their credit card masters.

[keepsmiling]

Purely FYI, got an offer for a Chase account today at 20%. I'd be so tempted to settle if I didn't have to count the forgiveness as income.

[DYLAN150]

Keepsmiling: May I ask how much you owe them and when you made your last payment to them? Thank you.

[keepsmiling]

Sure- it's one of my smaller balances at around 5500. Haven't paid any cc's since last August. Had an offer from Citi a while back for 25% of 13K also.
My ds is starting college and I imagine that besides the tax I'd get stuck for, I'd lose out on some serious scholarship money if I had to include vast forgiven sums considered income.

[frogger]

Why would a Bank sell my debt to a Junk Debt buyer for pennies on the dollar when I have offer to pay them one half of what I owe them over 36 months?

That one is easy. They sell it off in order to charge it off and get it off their books in order to satisfy the federal regulators.

Banks are required to have the numbers in a certain range, with assets, liabilities, and bad debt to fit in certain percentages.

Bad debt (like yours) skews the numbers, so they charge it off to get it off the books and life is great again, almost like it never happened.