Comment by aketchum | Hacker News Reader

Comment by aketchum | Hacker News Reader

Article is great, (with it being written by pat mckenzie that is almost tautological)

> The value of portfolios is a huge discount to the face value of the debts; at the point where a lender has only worked it themselves and the debt is a few months delinquent, portfolios generally fetch about 5 cents on the dollar. That value will continue to decay over time.

I agree with his point directionally (the value of the sold debt is far below the face value of the balance) but he is off on the absolute value. You can expect more like 7-15% after working the account for 4-5 months.

> Debts are conveyed to the debt buyers as large CSV files with minimal supporting documentation.

This is funny - it is true that just big ole csv files (only ever opened in excel of course) are the way the debt is sold but how else would you suggest it be done? And in my experience you provide the debt collections agency all supporting contracts and account documents for each loan.

> in my experience you provide the debt collections agency all supporting contracts and account documents for each loan

This might be true for first party lender to first party debt buyer, but it often falls apart after that first step.

The article mentioned the chain of debt ownership and that, in my experience, is where contracts and supporting docs are lost. Once you're buying debt 3 or 4 steps removed from the primary lender the documentation becomes sparser and sparser, which is why as the article rightly said, most of these "last mile" agencies rely on people's ignorance and use a "spray and pray" strategy for debt collection.

My experience, from a large primary card issuer in the US, was that most of the major, reputable debt purchasing agencies would only buy primary debt portfolios that had _contractual guarantees_ about the accuracy of the supporting contracts and docs. They'd spend a lot of time and effort reviewing them, but they would in turn outright _refuse_ any such provisions when THEY sold their debt to smaller agencies!

If the contracts and supporting documentation were digitized, you could theoretically upload them to S3 or similar and include links to them in the CSV.

> how else would you suggest it be done?

Might I recommend a blockchain and smart contracts?

I'll see myself out.

I think he's saying the lenders sell the debt portfolio for ~5 cents. It may then be realised for 7-15c by the buyer like you say.

debt collection by banks is muuuch higher than 5 %.

Even by standardized credit numbers, it is more like 60 %

Reply on news.ycombinator.com