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Time To Go Long Us Debt Collection Companies?

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http://globaleconomicanalysis.blogspot.com/2010/08/debt-collector-will-not-pay-more-than.html

Utah Loan Servicing is a debt collector that buys home equity loans from lenders. Clark Terry, the chief executive, says he does not pay more than $500 for a loan, regardless of how big it is.

“Anything over $15,000 to $20,000 is not collectible,” Mr. Terry said.

So 14K debt is collectable, 15K is not collectable.

Initial outlay = $500

If collected in full = $14K

Profit (14,000 - 500) / 500 = 27 or 2700%!

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http://globaleconomicanalysis.blogspot.com/2010/08/debt-collector-will-not-pay-more-than.html

So 14K debt is collectable, 15K is not collectable.

Initial outlay = $500

If collected in full = $14K

Profit (14,000 - 500) / 500 = 27 or 2700%!

I set up these sort of companies for a living and can get access to debt for smilar costs if you really wanted to.

Its not a very nice industry to be fair.

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To be fair:

He didn't say that every loan below 15,000 IS collectable

tim

True. But even if one in ten is collectable, then

10X $500 = $5K: initial outlay for 10x $14K loans

1 in 10 $14Kloan collectable : $14K revenue

Profit: ($14K - $5K) / $5K = 1.8 or 180%

With adequate profit, capital is very bold. A certain 10 per cent. will ensure its employment anywhere; 20 per cent. certain will produce eagerness; 50 per cent., positive audacity; 100 per cent. will make it ready to trample on all human laws; 300 per cent., and there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged.

K.Marx, Das Kapital. vol 1, ch.31

http://www.marxists.org/archive/marx/works/1867-c1/ch31.htm

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True. But even if one in ten is collectable, then

10X $500 = $5K: initial outlay for 10x $14K loans

1 in 10 $14Kloan collectable : $14K revenue

Profit: ($14K - $5K) / $5K = 1.8 or 180%

K.Marx, Das Kapital. vol 1, ch.31

http://www.marxists.org/archive/marx/works/1867-c1/ch31.htm

Have you factored time into your equation?

Edited by Alan B'Stard MP

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Do you consider one in ten loan recovery as too high rate?

Break-even point is one in 28 assuming 28 loans $14K each, $500 per loan to buy.

They don't have the money, or the inclination to pay in the first place. The reason why the debts are worth 500 is because that is what they are worth.

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$15k will be about the limit of loans people can get to pay existing debts, rolling all their debts into one easy payment, and probably about the point where people stop trying to pay it as there is just no point as it's too much to ever pay back... the point where the amount they can afford to repay each month is less than the monthly interest.

There is good money to be made in debt collection at the moment, purely because people are still paying. This will be changing rapidly and there will probably be watershed with a trigger event, after which, NO-ONE will pay. The trigger event will probably be someone being accidentally killed by an overly pushy debt collector or something.

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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