How Much is My Debt Worth?

So you find out that your debt has been sold onto another company!


Credit Services Association say on their site:

My debt was purchased; can I know how much it was purchased for?

No, this is commercially sensitive information so members are not obliged to divulge this. It is not the case that a debt purchased for less than the outstanding amount reduces, the full amount is still legally outstanding therefore knowing the purchase price does not make a difference.”

You bet this is commercially sensitive information!! Do you think they really want you to know how much they paid for your debt?


Link Financial Debt Collection Agency (DCA), say the following on their website:

“Through our debt purchase offering we unlock value in non-performing loans for our clients. Since 1998 Link has acquired more than 1,000 NPL portfolios across Europe alongside its financial partners for a total purchase consideration of close to €1 billion.

Our expertise and transparency means that we are trusted both by investors and clients  in a part of the market that is difficult to access and where there is a premium on compliance.”

I wonder how many non-performing loans there are to one portfolio?

Will transparency go as far as telling the individual how much their debt was purchased for?

My understanding of when a portfolio is purchased the portfolio is made up of different debts. The purchaser will be well aware of what risks are contained within a portfolio. They will know in advance of purchasing the portfolio what percentage are: payers, non-payers, missing, home owners, etc. etc.

So from that information, they will have a very good idea of what the true value of a portfolio is – or what profit they are likely to make from it!

1stLocate Debt Purchase:

“We are actively looking to purchase consumer or commercial debt portfolios across Europe (particularly UK, France and Germany). We will only consider portfolio with comprehensive supporting/original documentation in our preferred sectors.

We will purchase written off ‘goneaway’, trace or skip accounts complete with supporting account/debt information. Our expertise in this sector enables us to purchase accounts that other organisations decline. One of the largest costs to any lender are losses associated with accounts that have ‘disappeared’. Our expertise in accurately tracing goneaway accounts is second to none and we are often able to trace the debtor and restore relations with the customer resulting in the resumption of repayments.



Intrum Justitia (DCA)

“Why Sell?

The collections side of financial administration is an area which is heavily labour intensive.  IT investment to aid collection is often difficult because there is almost always a range of other key projects which are prioritised where returns are seen to be greater.
By outsourcing this area of your business, you will be able to:

• Access a unique product mechanism to maximise cash flow without outsourcing or re-assigning accounts – and deliver an immediate injection of cash to your bottom line;
• reallocate staff to more creative areas of your business and maintain your headcount;
• release valuable IT resources in terms of people, hardware and software;
• reduce or remove the administrative costs of having a collections team;
• return to your core competencies rather than having to expend time and skills on in-house debt collection whilst maintaining control throughout the sale process.

Debt sale should be thought of as part of an overall debt collection strategy – one tool that can be used when appropriate in a balanced approach to receivables management.”

So how much is you debt worth?

1st Credit (DCA)

“The sale of overdue debt has long been a part of the credit and debt management process in the US. In the UK, debt purchase is a relatively young market that has grown rapidly.

1st Credit has played a major role in the growth of this market in the UK. Since 2002, we have spent more than £300 million buying portfolios with a face value in excess of £3 billion. We purchase various types of consumer debt from a range of lenders, including banks, credit card companies, telecoms, retailers and utility companies.

Why sell debt?

Selling consumer debt to 1st Credit provides clients with:

  • immediate returns on overdue debt
  • certainty of financial planning

  • reduced operating costs from administration and collection of debt

  • the ability to focus on core business and free up the workforce
  • a reduction in cost of capital as loan resources are no longer required

  • direct bottomline benefit for written off debt”

So back to the question How Much is My Debt Worth?

Looking at the figures above:

£3,000,000,000 (3 Billion) Face Value

£300,000,000 (300 Million) Purchase Price

They paid approximately £0.10 in the Pound for the debt.

Of course when it comes to collecting, they will be looking to collect 100% of the debt, and maybe even add interest?


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