A possible alternative to settlement
Date: Thu, 12/10/2009 - 19:29
A possible alternative to settlement
I've got this fellow I'm helping via PM. He's got a CA (debt buyer) that either cannot or will not validate an in-stat debt (I suspect cannot). He inquired if I thought he oughtta try low-balling them on a settlement at some point. That got me to thinking (!).
Given that the DB purchased this debt for peanuts (about $200, on $1800+ face) and can't validate to collect, what if he were to try to purchase the account for a lowball? Say three bills? The DB gets their investment back. And he escapes the 1099 tax hit, which effectively gets him his money back. Plus he skates on the CR damage. Ideally, without ever acknowledging the account as his.
Ideas? Feedback? Flames?!?
Well, in the world of repossession, a debtor is allowed to show
Well, in the world of repossession, a debtor is allowed to show up at the auction (if it's public) and bid on their own car........
While your suggestion is possible, I don't think it's feasible. If for no other reason than the mere processing of the transaction as a "sale" instead of a "payment" throws a stick in their spokes, so to speak. They would have to manually record the transaction and account for it separately, which is not in their "normal policies and procedures", and so management would have to get involved. Then they'd have to type up an assignment from them to the buyer, which probably is not pre-programmed as a form letter that they regularly use, so again management has to get involved. Management would review the proposal, and basically have to decide if they were willing to settle for $300. If so, then they'd probably say "treat it as a settlement instead of doing all this extra work."
Not to mention that JDB's usually don't buy/sell accounts in one-sees and two-sees -- they usually bundle up thousands of accounts and sell off huge portfolios at a time for millions of dollars.
BUT while we're thinking outside the box, you might think about this........
I have two loan licenses in Illinois (CILA & SFAA/(MV)RISA). [Well techncially I only have one CILA license, but it trumps SF and allows me to do SFAA transactions]. The CILA regulations specifically state that I can only sell my accounts to other lenders who hold the same license (or a bank/credit union that is state/federally chartered) . In other words, it would be illegal for me to sell my accounts to some random JDB who doesn't have an IL loan license.
Now I've never really looked up laws in other states, but I wonder if some credit card companies might be breaking the law by selling their accounts to JDB's who aren't licensed as a sales finance company?
