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.

  1. Bad Debt Expense

    An entry found on a business's income statement that represents ...
  2. Accounts Uncollectible

    Accounts uncollectible are loans, receivables or other debts ...
  3. Bad Debt

    A debt that is not collectible and therefore worthless to the ...
  4. Charge-Off

    A charge-off is a debt that is deemed unlikely to be collected ...
  5. Uncollected Funds

    Uncollected funds are the amount of a bank deposit that comes ...
  6. Limited Recourse Debt

    A limited recourse debt is debt in which the creditor has limited ...
Related Articles
  1. Personal Finance

    Why Debt Isn’t Always a Bad Thing

    When managed properly, debt can be used to achieve a higher overall rate of return.
  2. Personal Finance

    What Millennials Should Know About Good and Bad Debt

    Can you tell the difference between good and bad debt?
  3. Insights

    How Debt Limits A Country's Options

    While debt is fundamentally necessary to the operation of a national government, it can also be limiting and dangerous.
  4. Insights

    How Countries Deal With Debt

    For many emerging economies, issuing sovereign debt is the only way to raise funds, but things can go sour quickly.
  5. Personal Finance

    How To Manage And Consolidate Your Own Debt

    With debt management services costing a lot of money, this article looks at why it is better to manage your own financial liability.
  6. Personal Finance

    5 Reasons Why Debt Is Your Enemy

    Having debt can cost you both financially and mentally and can affect your retirement.
  7. Investing

    Evaluating a Company's Capital Structure

    Learn to use the composition of debt and equity to evaluate balance sheet strength.
  8. Personal Finance

    4 Debt-Busting AlternativesTo Balance Transfers

    Credit card balance transfers can help pay off debts – but they can cost you. Here are some other approaches worth checking out.
  9. Personal Finance

    Best 5 Money-Saving Tips to Get out of Debt

    Understand the different types of debt and the reasons why people get into debt. Learn about five tips to follow to get out of debt.
  10. 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.
  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. 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 >>
Trading Center