How much do collection companies pay for an account?

Question

Third party collections buy the account from the creditor, but at what percentage?

Answer 1

Like many said, it depends on how old the debt is. Who buys the debts etc.

Generally a fairly new debt could be sold for 50% to 80% of the total amount.

A little older debt may go from 30% to 60%

A very old debt (generally one that is out of the collecting SOL) that is purchased by a junk debt buyer may go for .01 cents to .05 cents per $100.00 or $1,000 of the debt.
(so if you owed a $2,000 debt and it was sold to a junk buyer, they may have purchased it for .02 cents.)


*all amounts are more or less

Answer 2

It depends on if it's corporate or private collections. For corporations It's something like 10 cents on the dollar but it varies depending on collectability and something called a "Dun & Bradstreet" score. That gives them some idea of how likely they are to collect the money. I don't think it's that different for private collecting but they use different credit reporting agencies. Anything they get back over the 10 cents on the dollar is profit to them. The company gets some money out of it and they get to write it off on their taxes as a bad debt.

Answer 3

It varies. It depends on several different factors. One is the age of the debt. The older the debt, the harder it is to collect. So the percentage would be less.
I honestly don't know the other factors that would determine the percentage. It could be type of debt, amount of debt, etc.
I have some good friends in that business.

Answer 4

My experience has been .02-.05 on the dollar. This was for unsecured paper aged over 270 days. Secured might fetch a higher rate.

Answer 5

It differs from company to company....
As low as 15 cents on the dollar and i've heard as much as 75 cents on the dollar.

Answer 6

They buy them in big amounts not just one account, and make a profit depending on the amount owed.