Non-Recourse Sale

DEFINITION of 'Non-Recourse Sale'

A transaction in which a creditor turns a bad debt over to a third party in exchange for a percentage of the total debt amount, and in which the third party is without means of redress or compensation if the debt remains uncollectible. In a recourse sale, the third party could try to sell back any uncollectible debts.

BREAKING DOWN 'Non-Recourse Sale'

After purchasing bad debts for pennies on the dollar, debt collectors can keep as profit whatever portion of the debts they are able to collect. The original owner of the bad debt (e.g., a credit card company) gets a liability off its books and saves the time and expense of making further attempts to collect a stubborn debt. A non-recourse sale entails more risk for the purchaser of the bad debts, but usually means the seller is finished dealing with them once and for all.

RELATED TERMS
  1. Bad Debt

    A debt that is not collectible and therefore worthless to the ...
  2. Debt Buyer

    A company that purchases debt from creditors at a discount. Debt ...
  3. Accounts Uncollectible

    Loans, receivables or other debts that have virtually no chance ...
  4. Limited Recourse Debt

    A debt in which the creditor has limited claims on the loan in ...
  5. Net Debt

    A metric that shows a company's overall debt situation by netting ...
  6. Charge-Off

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

    Understanding Bad Debt

    Bad debt is money a company or lender is owed, but is unable to collect.
  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. 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.
  4. 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 ...
  5. 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.
  6. 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.
  7. Investing

    Total Debt to Total Assets

    Total Debt to total assets, also called the debt ratio, is an accounting measurement that shows how much of a company’s assets are funded by borrowing. In business, borrowing is also called leverage.
  8. 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.
  9. 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.
  10. Professionals

    Capital Structure

    This is an important concept in valuing a company.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. What is a good debt ratio, and what is a bad debt ratio?

    Learn about the factors that influence how investors and lenders evaluate the debt ratio for a company and why the answer ... Read Answer >>
  5. 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 >>
  6. What is the difference between the debt ratio of a company and the debt ratio of ...

    Discover the different financial evaluation measures that are most commonly applied to individuals and corporations, respectively. 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