Debt Buyer

AAA

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.

INVESTOPEDIA EXPLAINS '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. Cash Management

    The corporate process of collecting, managing and (short-term) ...
  2. Delinquency Rate

    The percentage of loans within a loan portfolio that have delinquent ...
  3. Creditor

    An entity (person or institution) that extends credit by giving ...
  4. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to ...
  6. Charge-Off

    A term describing an expense on a company's income statement. ...
Related Articles
  1. Budgeting

    Negotiating A Debt Settlement

    If you're being harassed by a debt-collection agency, you can take charge. Find out how.
  2. 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.
  3. Entrepreneurship

    Small Business: Speed Up Receivables To Avoid A Cash Crunch

    Waiting for customers to pay can be a losing game. Look to factoring for quicker cash.
  4. Credit & Loans

    A Guide To Debt Settlement

    Find out how you can negotiate your way to a lower debt load by paying up front.
  5. Budgeting

    Debt Consolidation Made Easy

    These five steps can help get you out of debt faster and easier than you'd ever imagined.
  6. Options & Futures

    When You Can't Pay Uncle Sam

    If you can't pay your taxes, there are some steps you can take to protect yourself. Discover your options here.
  7. Credit & Loans

    Top 10 Common Mortgage Scams To Avoid

    How do you know which companies to avoid? Look for these telltale signs.
  8. Credit & Loans

    Can You Get A Mortgage On A Mobile Home?

    You can get a loan for a mobile home, but it may not be a mortgage. These are the choices for funding manufactured housing.
  9. Home & Auto

    Tips For Maximizing The Value Of A Kitchen Touchup

    At a fraction of the cost of a remodel, a homeowner can make strategic updates to his or her kitchen that could transform this part of the home.
  10. Economics

    What is a Promissory Note?

    A written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center