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Cavalry Portfolio Services is one of the largest debt buyers in the U.S., specializing in purchasing charged-off consumer debts like credit card balances, auto loans, and medical bills. They acquire these debts at steep discounts - often between 2 to 10 cents per dollar - and attempt to recover the full amount through collection efforts, including litigation. While they are a legitimate business with BBB accreditation, Cavalry has faced criticism for aggressive tactics, including lawsuits and regulatory penalties.
Key Points:
For professionals in debt trading or collection, understanding Cavalry’s acquisition strategies, compliance challenges, and recovery methods is essential for navigating this industry.
Cavalry’s origins date back to 1991 when Andrew Zaro founded it under the name Zirmack Investments, LP. In 1998, it rebranded as Cavalry Investments, LLC. The company experienced significant growth between 2001 and 2006, with its portfolio expanding from $3 billion to $14 billion and its managed accounts increasing from roughly 1.6 million to nearly 2.5 million during that period [3, 13]. In 2003, Cavalry Portfolio Services, LLC was established to handle daily collection activities, while the parent company and related entities focused on owning the debt portfolios.
Today, Cavalry Investments, LLC operates as the parent company, with Cavalry SPV I, LLC and Cavalry SPV II, LLC managing purchased debt portfolios. Cavalry Portfolio Services, LLC oversees the collection processes. Headquartered in Greenwich, Connecticut, the company also has offices in Phoenix, Arizona, and Tulsa, Oklahoma, and employs between 400 and 600 people [3, 13, 14].
Cavalry’s expertise lies in acquiring non-performing consumer loan portfolios from major financial institutions such as Citibank, Chase, Bank of America, and Capital One. These portfolios typically include credit card debt, auto loans, medical bills, utility balances, and telecommunications debt. This focus on high-volume acquisitions and recoveries forms the backbone of Cavalry’s operations [3, 4, 14]. Understanding this structure is key to verifying Cavalry’s legitimacy.
Cavalry operates as a legitimate debt collection company, legally authorized to purchase and collect overdue consumer debts. It has been accredited by the Better Business Bureau (BBB) since February 22, 2022, and holds an A- rating. The company’s compliance efforts are led by Chief Compliance Officer Anne Thomas and Compliance Officer Marina Banje, underscoring its adherence to regulatory standards.
However, its reputation among consumers tells a different story. Despite its A- BBB rating, Cavalry has a 1 out of 5-star customer rating on the platform. Over a three-year span ending in 2026, more than 600 complaints were filed with the BBB, and the Consumer Financial Protection Bureau received over 1,100 complaints in a single year. Common grievances include issues with debt validation, aggressive legal actions, and challenges in obtaining proper documentation [12, 14].
Cavalry’s regulatory history includes several noteworthy settlements. In 2016, the company agreed to stop collection efforts on $19.7 million in debt and paid $350,000 to resolve claims with the West Virginia Attorney General. Earlier, in 2013, it paid a $175,000 fine to the Arizona Department of Financial Institutions. More recently, in October 2020, Cavalry reached a $24 million settlement in a class-action lawsuit alleging violations of the Telephone Consumer Protection Act (TCPA) [3, 12, 4].
For those in the financial and debt trading industries, Cavalry’s legitimacy is backed by its corporate structure and BBB accreditation. However, its history of consumer complaints and regulatory actions underscores the importance of conducting thorough due diligence before engaging with the company.
Cavalry Debt Collection Portfolio Acquisition Breakdown by Debt Type
Cavalry’s business revolves around buying charged-off consumer accounts in bulk from original creditors at significant discounts. These accounts are typically considered unrecoverable by the original lenders. Cavalry focuses on sourcing from major national banks, credit card companies, fintech lenders, and auto finance providers.
For example, in 2011, Bank of America sold a credit card portfolio to Cavalry SPV I, LLC. This portfolio included an account with a $3,226.35 principal balance, which later accrued over $6,300 in interest. Cavalry’s ability to secure such deals often stems from maintaining strong relationships with institutions like Citibank and Lending Club.
Once these portfolios are acquired, Cavalry employs a variety of collection strategies. These include managing collections through its subsidiaries, outsourcing to third-party agencies, or referring accounts to law firms for litigation. The company’s corporate structure supports this flexibility, with acquisitions commonly held under entities like Cavalry SPV I LLC, Cavalry SPV II LLC, and Cavalry SPV LLC. This operational framework is central to how Cavalry navigates the debt acquisition landscape.
Cavalry’s acquisition strategy goes beyond just buying debt; it involves carefully assessing the quality and age of the portfolios to determine their value. Debt categories are evaluated to set pricing, which can vary significantly depending on factors like loan age. Typically, portfolio prices range from 0.5 cents to 12 cents on the dollar, with freshly charged-off debts sometimes priced as high as 15 cents per dollar. Older debts in the secondary market tend to sell for around 7 cents on the dollar.
Here’s a breakdown of the main debt types Cavalry acquires, along with their typical acquisition status, sourcing channels, and estimated purchase rates:
| Debt Type Sourced | Typical Status at Acquisition | Sourcing Channel Examples | Estimated Purchase Rate |
|---|---|---|---|
| Credit Card Balances | Charged-off / Written-off | Citibank, Bank of America, Chase, Capital One, Synchrony | 0.5¢ – 12¢ per dollar |
| Personal Loans | Defaulted | Lending Club | 0.5¢ – 12¢ per dollar |
| Auto Loan Deficiencies | Post-repossession | Various Auto Lenders | 0.5¢ – 12¢ per dollar |
| Utilities & Telecom | Charged-off | Various utility and telecom companies | Varies by age/quality |
In addition to purchasing directly from original creditors, Cavalry also sources portfolios from other debt buyers in the secondary market. Companies like Hilco Receivables and Equable Ascent Financial are examples of firms from which Cavalry acquires resold debt portfolios. This dual approach - direct acquisitions and secondary market purchases - ensures a consistent flow of opportunities, covering a range of debt ages and quality levels.
After acquiring portfolios, Cavalry's recovery methods play a key role in determining its financial success.
Cavalry uses a structured approach to debt collection, starting with written notices and phone calls. If these initial efforts don't work, the process escalates to credit reporting and even legal actions. The company relies on its legal entities - Cavalry SPV I, LLC and Cavalry SPV II, LLC - to secure judgments, which can lead to wage garnishment or bank account levies. For example, in Georgia alone, Cavalry filed over 4,000 lawsuits against consumers during 2021 and 2022.
All collection activities must align with the Fair Debt Collection Practices Act (FDCPA), which sets strict rules. These include prohibiting calls outside the hours of 8:00 AM to 9:00 PM, banning the use of abusive language, forbidding false threats, and restricting the sharing of debt details with third parties like family or employers. Following FDCPA guidelines, Cavalry sends a debt validation notice within five days of the first contact, giving consumers 30 days to dispute the debt.
The company also adheres to the Telephone Consumer Protection Act (TCPA) and the Fair Credit Reporting Act (FCRA). Notably, in October 2020, Cavalry settled a class-action lawsuit for over $24 million due to TCPA violations. Additionally, its credit reporting policy ensures that tradelines are removed from credit reports about 60 days after a debt is fully paid or settled.
When consumers dispute a debt within the 30-day window, Cavalry must halt all collection efforts until it provides proof of debt ownership and an accurate balance. Validation typically includes a "Bill of Sale and Assignment" along with electronic account records. Cavalry often accepts settlements ranging from 40% to 60% of the original debt amount. Since the company buys these debt portfolios at a fraction of their face value, even reduced settlements remain profitable. While lump-sum payments are preferred, monthly repayment plans are also negotiable. It’s important for consumers to get settlement agreements in writing, specifying the payment terms, amounts, and any impact on credit reporting.
For debts that are past the statute of limitations, Cavalry includes a disclosure in its collection letters: "The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. We will continue to report information about your account to credit reporting agencies". Even if a lawsuit has been filed, negotiations remain possible. However, debtors must formally respond to the court to avoid a default judgment while settlement talks are ongoing.
These strategies highlight Cavalry's calculated approach, balancing aggressive legal action with opportunities for consumer negotiation, shaping its role in the debt trading industry.
When selling debt portfolios to firms like Cavalry, thorough documentation and strict adherence to compliance standards are non-negotiable. Sellers need to provide detailed records, including the original creditor's name, the exact amount owed, the date of last activity, and a complete chain of title. This ensures buyers can verify ownership and meet regulatory requirements. Missing or incomplete documentation can lead to significant regulatory risks and legal challenges for buyers.
A full chain of title is especially important when portfolios pass through multiple hands. For instance, when Citibank, N.A. transferred accounts to Cavalry SPV I, LLC on June 22, 2016, the Bill of Sale and Assignment included electronic files with detailed account data. Without such detailed records, lawsuits can be dismissed, undermining the portfolio's value.
Sellers should also conduct compliance audits to verify state licensing and ensure no time-barred debts are included. A notable example occurred in February 2016 when Cavalry had to forgive $19.7 million in debt for 2,847 consumers in West Virginia due to licensing issues. Additionally, identifying accounts with potential identity theft concerns can prevent future legal complications.
Once portfolios are fully documented and compliant, sellers can focus on targeting potential buyers effectively.
After preparing and auditing portfolios, sellers need to engage buyers through secure and transparent auction platforms. Platforms like Debexpert connect sellers with institutional buyers using a variety of auction formats, each suited to different portfolio types and seller goals.
| Auction Type | How It Works | Best For |
|---|---|---|
| English Auction | Starts with a low bid, increasing as buyers compete; highest bid wins | Portfolios with strong documentation and high recovery potential |
| Dutch Auction | Begins with a high price that decreases until a buyer accepts | Sellers looking for quick sales with minimum price thresholds |
| Sealed-Bid Auction | Buyers submit confidential bids; the highest offer wins | Sensitive portfolios requiring discretion |
| Hybrid Auction | Combines elements of multiple formats for flexibility | Complex portfolios with varied asset quality |
Debexpert offers secure file-sharing capabilities with end-to-end encryption, allowing sellers to provide masked data during initial reviews. This protects consumer privacy while giving buyers enough information to evaluate portfolios. Additionally, portfolio analytics enable sellers to price accounts competitively, factoring in debt age, original creditor, and geographic distribution.
"A debt buyer purchases a creditor's debt at the current market value of the outstanding balance in order to recover on it." - Penny Campbell, Chief Commercial Officer, Jefferson Capital Systems
Providing complete data packages not only ensures compliance with FDCPA regulations but also boosts buyer confidence. This transparency can lead to higher sale prices, even in a market where secondary debt often trades for as little as 7% of its face value. By reducing buyer risk, sellers position themselves to achieve better outcomes in their transactions.
Cavalry has shaped the debt trading industry with its strategies for acquiring and managing debt, setting standards that influence broader market practices.
Cavalry's growth has made it a cornerstone of U.S. debt portfolio trading. By 2002, the company ranked among the top 10 debt buyers, managing a $7.9 billion portfolio - more than doubling its receivables from the previous year. By 2006, this figure had climbed to $14 billion. Over the years, Cavalry has acquired more than $20 billion in consumer debt, solidifying its position as a leading player in the industry.
This scale offers a vital service to creditors. Banks, retailers, and mortgage companies often sell non-performing loans to firms like Cavalry, allowing them to clear underperforming assets from their books. As Dennis Hammond, Executive Director of the Debt Buyers Association, stated:
"Getting those loans off their books enables lenders to get their cash immediately, which improves their bottom line and helps them on Wall Street".
This model has become a common practice, with creditors increasingly choosing to sell debt portfolios outright instead of relying on third-party collection agencies. Cavalry's ability to provide liquidity has become a benchmark for the industry, influencing how lenders approach debt management.
Cavalry's reach goes beyond credit card debt. The company was among the first to diversify into areas like auto loans, utility debts, and telecommunications. This diversification has proven profitable when debts are purchased at the right price - typically between 0.5 cents to 12 cents on the dollar.
Another hallmark of Cavalry's approach is its high-volume litigation strategy. By buying debt for pennies on the dollar and pursuing legal action to recover the full amount, the company has set a precedent that others have followed. However, this approach has also drawn regulatory attention, leading to settlements with state authorities. Despite the scrutiny, this strategy has had a lasting impact on how debt recovery is approached across the industry.
Cavalry's dominance provides valuable insights for professionals navigating the debt trading landscape.
Cavalry's operations highlight several key strategies for success in the debt trading industry:
"Changes in the ownership of underperforming debt is the factor that's having the most effect on this market".
Cavalry specializes in acquiring non-performing consumer loans at steep discounts from major banks. By diversifying its portfolios across various sectors - like credit cards, auto loans, utilities, and telecommunications - the company reduces risk while maximizing recovery opportunities. These debts, sourced from institutions such as Citibank, Chase, Bank of America, and Capital One, highlight the importance of spreading investments across multiple industries.
The firm uses a Special Purpose Vehicle (SPV) structure to isolate portfolio ownership, minimizing financial risks. Cavalry's reliance on purchasing discounted debts and employing high-volume litigation has proven effective for collections but has also drawn regulatory attention. Settlements with regulators highlight the compliance challenges tied to their aggressive strategies. Understanding these practices is crucial for professionals aiming to mitigate risks and enhance compliance in debt collection and trading.
To navigate the complexities of the debt trading and collection industry effectively, professionals can take several key actions:
For sellers preparing portfolios, providing comprehensive data packages - including creditor names, amounts owed, payment histories, and legal documentation - is essential. Buyers like Cavalry prioritize portfolios with clean and complete documentation, as it reduces litigation risks and enhances the portfolio's value. Platforms like Debexpert facilitate this process by connecting sellers with buyers who value thorough due diligence, ensuring smoother transactions and confidence in the debt's validity.
To determine if Cavalry owns your debt, start by carefully reviewing the debt validation notice they provide. This notice should include details about the debt - compare these with your own records to ensure they align. Verify that the notice confirms Cavalry has purchased the account from the original creditor. Since Cavalry operates as a debt buyer, they acquire overdue accounts from creditors. If anything appears confusing or incomplete, you have the right to request further information or documentation directly from them.
If Cavalry has filed a lawsuit against you, it’s crucial to take immediate action to protect yourself and avoid a default judgment. Ignoring the lawsuit isn’t an option - doing so could result in serious consequences like wage garnishment, bank account levies, or even liens on your property.
Make sure to respond within the court’s specified deadline, which is typically between 20 and 30 days. Take time to verify whether the debt is legitimate, and if needed, consult with a debt relief attorney. They can help you understand your options, whether that means building a defense or negotiating a settlement. Acting quickly is key to safeguarding your rights.
Debt sellers reduce compliance risks by ensuring all debt assignment paperwork is both accurate and complete. Key details, such as the effective date, consideration paid, and account information, must be clearly documented. Maintaining detailed transfer records is crucial to avoiding legal complications, including potential breaches of laws like the Illinois assignment law.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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