Debt Buyer

DEFINITION of 'Debt Buyer'

A company that purchases debt from creditors at a discount. Debt buyers, such as a collection agencies or a private debt collection law firm, buys delinquent or charged-off debt at a fraction of the debt's face value. The debt buyer then collects on the debt either on its own or through the hiring or a collection agency, or resells portions of the debt, or any combination of these alternatives. Debt buyers primarily purchase delinquent debt arising from credit cards, automobile loans, medical bills, mortgages, retail accounts and utilities.

BREAKING DOWN 'Debt Buyer'

Debt collectors generally pay a very low percentage of the face value of the debt. Debt buyers exist as small, private businesses or large publicly-traded companies. They are classified as active if they try to collect on the debt themselves, or passive if they hire an outside collection agency or collection law firm to recover the debt. The debt buyer business is a multi-billion dollar industry.

RELATED TERMS
  1. Debt Collector

    A company or agency that is in the business of recovering money ...
  2. Bad Debt

    A debt that is not collectible and therefore worthless to the ...
  3. Net Debt

    A metric that shows a company's overall debt situation by netting ...
  4. Fair Debt Collection Practices ...

    A Federal law that limits the behavior and actions of debt collectors ...
  5. Long-Term Debt

    Long-term debt consists of loans and financial obligations lasting ...
  6. Debt Avalanche

    A method that involves making the minimum payment on each debt, ...
Related Articles
  1. Credit & Loans

    Inside Secrets of the Debt Collection Business

    Understanding how the debt collection business works will give you a better chance of coming out ahead if you ever have to tangle with a collection agent.
  2. Personal Finance

    Dawn Of The Zombie Debt

    Are old debts coming back to haunt you? We'll show you how to keep these zombies from eating you alive.
  3. Investing

    Advising FAs: Explaining Debt to a Client

    This article examines the different types of debt and breaks down which types of debt are better than others. The main types of debt covered here include car loans, credit cards, mortgages and ...
  4. Personal Finance

    Outfox The Debt Collector's Hounds

    Dealing with a collection agency is scary if you don't know your rights. We help you take back the power.
  5. Credit & Loans

    The 4 Best Debt Reduction Services

    It can be tricky to find the best debt reduction services for your financial situation. These top 4 debt consolidation firms help make the process easier.
  6. Credit & Loans

    How To Beat Off A Zombie Debt Collector

    Sounds like a bad horror movie, but it really could happen to you. Here's how to identify zombie debt and send collectors back to the dead-debt graveyard.
  7. Retirement

    Why Retirees Are Carrying More Debt Than Ever

    It was recently discovered that as people reach retirement they are carrying more debt than ever before.
  8. Investing

    Debt Ratio

    The debt ratio divides a company’s total debt by its total assets to tell us how highly leveraged a company is—in other words, how much of its assets are financed by debt. The debt component ...
  9. Investing News

    Does 2016 Spell the End of a Global Debt Cycle?

    Examine the growth of global debt from 2010 to 2015. Emerging market debt has grown significantly, while advanced economy debt has grown marginally.
  10. Investing Basics

    Will Corporate Debt Drag Your Stock Down?

    Borrowed funds can mean a leg up for companies or the boot for investors. Find out how to tell the difference.
RELATED FAQS
  1. If a collection agency buys my debt from another agency, does the debt become 'new'?

    Find out what happens when your debt account is sold from one collection agency to another and the impact on your balance ... Read Answer >>
  2. Why would you look at a company's net debt rather than its gross debt?

    Learn the difference between net debt and gross debt, how to calculate debt using a company's financial statements and why ... Read Answer >>
  3. What's the difference between debt consolidation and debt management or debt settlement?

    Learn about different ways of handling debt when you become overwhelmed, including debt consolidation, debt management and ... Read Answer >>
  4. What are my rights under the Fair Debt Collection Practices Act (FDCPA)?

    Read about the rights and protections granted to you as a debtor under the Fair Debt Collections Practices Act, and learn ... Read Answer >>
  5. How long do typical debt management plans take to pay off debt?

    Find out more about how debt management plans are administered and what circumstances determine how long a management plan ... Read Answer >>
  6. Why is debt issued in both temporary and permanent forms?

    Debt is separated into two categories: 1) Temporary or short-term 2) Permanent or long-term. Temporary or short-term debt ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center