Selling non-performing debts to a collection agency is part of running a business. Due to legal requirements, you will have to provide ample documentation of both the debt, attempts to collect on the debt, and any communications with the debtor. You are not legally obligated to report the delinquent debt to the credit bureaus, but it may make the process of selling the debt simpler.
- Skill level:
- Moderately Challenging
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Gather documentation of the debt at the point it was incurred along with any communications with the debtor. The Fair Debt Collection Practices Act obligates all creditors to provide ample documentation of the debt in question to ensure legal compliance.
Report the delinquent debt to one or more of the major credit bureaus (Transunion, Equifax, and Experian). You will need to pay a subscription fee to each bureau that you wish to provide the report for. All credit bureaus will request documentation from you proving both the debt and the delinquency.
Find a collection agency or Debt Buyers Association that may be interested in purchasing your debt. Certain debt collection agencies specialise in specific types of debt. For example, if you're a landlord attempting to collect from a delinquent tenant, you can sell the debt to a company that specialises in that field.
Contact the debt collection agency of your choice. Offer to sell the bad debt that you own. Compare the prices offered by various debt collectors to ensure that you achieve the best deal possible. If the debtor still has significant assets, and you can substantiate that to the collector, you may be able to get a higher price for the debt in question.
Finalise the sale with the debt collector of your choice. Update your business records to reflect that you've discharged the debt.
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