[linuxftw]

Is there good money in it?

There's actually a good startup opportunity here. Many of these debt collectors are unethical. You could buy these bad debts for pennies on the dollar, settle them for a very modest margin, and help the poor people fix their credit without filing for bankruptcy.

[larrywright]

Context: I worked for 16 years for a company that did, among other things, debt collection. It was a small but profitable part of their business. We’re talking relatively low dollar bills - cell phone, cable, power, etc - rather than student loans, medical, or credit card.

There are different levels of debt collection. The first level is generally done by the guarantor. Someone falls behind on a bill, service is shut off, and the company tries to get the consumer to pay the bill. The next level is when a company sends the bill to an outside collection agency to attempt to collect on it. The collection agency will get some commission on that if they manage to collect. The debt is maybe 6-12 months old at this time. If the first agency fails, sometimes it will get sent to a second or third agency to see if they have more luck. At some point in time the company will decide that the debt is unlikely to be collected and they will write it off. It’s at this point that debt may get sold. The debt is likely years old at this point. The company that buys it will buy for pennies on the dollar (it’s like any market, sometimes it’s more, sometimes it’s less). They are then the owner of the debt and any money they collect they get to keep. They’re able to settle for much lower amounts. If you have a $1000 debt that was bought for $50, you can settle for $250 and still make a profit. The consumer is able to clear the debt from their credit report for a fraction of what they owed (though it still shows they paid it to a collection agency and that still hurts their credit, but not as much as an unpaid debt).

Long answer to your question, but yes there can be good money in it, and there is probably an opportunity here to do some good.

[mmastrac]

https://symend.com/ is doing something similar to this (no connection, but I met the local team a while back). I like the approach of "ethical debt collection from real humans with real backstories". They just raised a good chunk of change as well.

[adrianN]

It seems like that strategy is difficult in an efficient market of unethical debt collectors, as intuitively they would be able collect a larger fraction of the debts than the friendly debt collector.

[darkwizard42]

I think this is the hardest part. You would have to pay the same price for the debt as the unethical collectors and then make less off of it than the unethical ones probably putting you in the red :/