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Debt buyers purchase overdue debts from original creditors at a fraction of their face value, typically paying $0.04 to $0.14 per dollar. This practice helps creditors reduce risk and focus on their core operations while enabling debt buyers to recover funds through collections. The industry is dominated by credit card debt (70%) but also includes medical bills, auto loans, and student loans.
Key players in the debt-buying industry include:
When selecting a debt buyer, consider their compliance standards, financial stability, specialization, and reputation. Ensure thorough documentation and clear contractual terms to minimize risks and maximize recovery.
Top 8 Debt Buyers Comparison: Specialization, Pricing, and Compliance Overview
Debexpert is a leading name in the debt-buying industry, using advanced tools to simplify portfolio trading. Functioning as an online debt auction marketplace, Debexpert connects sellers with a network of over 400 debt buyers across 10 countries. The platform handles a variety of debt types, including consumer, medical, auto, real estate, credit cards, payday, and student loans. Its goal? To match sellers with buyers for both performing and non-performing debt.
Debexpert adheres to stringent standards set by RMAi and CFPB, ensuring that all transactions align with both industry guidelines and federal laws. This commitment is especially important given the sensitive personal information and complex regulations tied to debt sales. By operating through a certified marketplace, sellers can reduce risks often associated with secondary markets. Buyers on the platform are thoroughly vetted, maintaining a high bar for professionalism and compliance.
Debexpert’s auction model fosters transparency by allowing multiple buyers to bid on debt portfolios, ensuring sellers receive fair market prices. As the company highlights:
Debexpert has the largest debt buyers network to get the best price for your debt portfolio.
The platform also offers tools to assess portfolio value and collects key details - such as debt type, performance status, and size - during registration. This ensures better matches between buyers and sellers. Such transparent practices make for a faster, more secure transaction process.
Debexpert’s approach brings several advantages for sellers. By leveraging its trusted reputation and clear processes, the platform enables quick deal closures, often within just a few days. Professional intermediaries and an efficient evaluation system help streamline the experience. Sellers gain access to a diverse pool of buyers, including institutional investors, mid-size retail investors, and niche players like Buy Here Pay Here (BHPH) dealerships.
Debt pricing is determined through competitive bidding, with rates typically ranging from 3% to 20% of the debt’s face value. Debts acquired directly from original creditors generally fetch the highest prices. To ensure security, Debexpert offers encrypted file sharing and provides detailed portfolio information upfront, making the process both safe and efficient.
Encore Capital Group is the largest publicly traded debt buyer in the U.S. by revenue, with 2018 earnings hitting $1.4 billion. The company focuses on purchasing defaulted consumer debt portfolios, primarily from credit card and telecommunications accounts. These acquisitions are carried out through its subsidiaries, including Midland Credit Management (MCM), Asset Acceptance, and Atlantic Credit & Finance. Since its inception, Encore has acquired rights to over $200 billion worth of defaulted consumer debts.
Encore has faced regulatory scrutiny in the past, including enforcement actions by the CFPB. In October 2020, the company agreed to pay a $15 million civil penalty and $78,308.81 in consumer redress for breaching a previous consent order.
In response, the company has worked to strengthen its compliance measures and operational practices. By 2024, Encore’s global portfolio purchases surpassed $1.35 billion, and 92.5% of MCM consumers reported positive experiences. The company employs around 8,300 people worldwide and expanded its international presence in 2018 by acquiring the British debt buyer Cabot Financial.
Encore specializes in purchasing charged-off accounts, often acquiring debts at around 2.4 cents on the dollar. Its strategy revolves around three main pillars: market focus, competitive advantage, and balance sheet strength. In 2024, U.S. collections through MCM reached $1.6 billion, with an estimated $5 billion in remaining collections. Encore’s mission is to help make credit accessible by partnering with consumers to improve their financial standing. Since its founding, the company has contributed $14.5 billion back into the financial credit ecosystem. This commitment to operational transparency ensures sellers meet strict documentation standards when selling portfolios.
Sellers working with Encore must ensure their portfolios include thorough and accurate documentation. Regulatory settlements have required Encore to verify debts with original account-level documents if a consumer disputes them. The company is also prohibited from reselling purchased debts to third parties, reducing risks tied to chain of title issues. Additionally, Encore cannot file lawsuits without documentation proving a debt’s accuracy and enforceability, and it must disclose if a debt is time-barred. Sellers should verify that all portfolio information is precise and verifiable before engaging with Encore.
PRA Group stands out as one of the largest debt buyers in the U.S., leveraging advanced strategies to acquire charged-off portfolios. Established in 1996 and listed on Nasdaq under the ticker PRAA since November 8, 2002, the company has grown significantly, reporting $813 million in revenue in 2017. By 2000, it had already purchased $1 billion in face-value debt. Below, we dive into the company’s areas of focus, regulatory challenges, acquisition methods, and seller requirements.
PRA Group aligns its acquisitions with shifting consumer debt trends, concentrating on credit card and specialized portfolios. The company primarily acquires delinquent debts from major credit card issuers like Visa, MasterCard, and Discover. Through its subsidiaries, it also handles specialized portfolios. For example, PRA Receivables Management, LLC focuses on bankrupt and insolvent accounts, while PRA Location Services aids auto lenders and insurers in recovering missing collateral. In 2002, nearly half of its debt portfolio came from major credit card issuers.
| Subsidiary | Focus Area |
|---|---|
| Portfolio Recovery Associates, LLC | Purchases and collects delinquent consumer debt |
| PRA Receivables Management, LLC | Manages bankrupt and insolvent accounts |
| PRA Location Services | Recovers missing collateral for auto lenders and insurers |
| Claims Compensation Bureau (CCB) | Files class action claims for institutional investors |
PRA Group's reputation has been shaped by multiple regulatory actions. In March 2023, the CFPB ordered the company to pay $24 million for continuing illegal practices and consumer reporting violations, despite a prior settlement in 2015 that required $19 million in refunds and an $8 million civil penalty. The CFPB Director criticized the company for ongoing violations, including intimidation and deceptive tactics. In other cases, PRA Group faced a $5.5 million settlement in North Carolina in 2024 and punitive damages of over $83 million in 2015 for maliciously prosecuting Maria Guadalupe Mejia over a debt she did not owe.
PRA Group typically purchases delinquent accounts for a fraction of their face value, with prices for high-quality accounts ranging from 4 to 14 cents on the dollar, depending on factors like debt age and history. The company also establishes long-term Forward Flow Agreements with major banks, ensuring predictable transaction volumes and pricing. For instance, a typical agreement might involve $20 million in face value per month at a rate of around 7%. PRA Group is certified by the Receivables Management Association International and has been a member of ACA International since 1997.
"At PRA Group, our clients can trust that we will do things the right way and deliver quality service for their customers once they sell their accounts to us".
"We will not charge you servicing fees nor resell your debt".
Sellers working with PRA Group must provide thorough documentation, such as original applications, statements, and affidavits, to validate the debt. This practice is essential given the company’s history of fines for filing lawsuits without proper documentation. Before selling to PRA Group, creditors should confirm the company’s compliance with the latest CFPB consent order to avoid potential liability or reputational issues. Typically, PRA Group acquires accounts that have been delinquent for 120 to 180 days and charged off by the original creditor. This allows sellers to recover part of their losses while steering clear of the public relations challenges tied to direct collection efforts.
Midland Credit Management (MCM) has been in business since 1953, establishing itself as a leader in U.S. portfolio purchasing and debt recovery. As a subsidiary of Encore Capital Group (Nasdaq: ECPG), MCM benefits from strong financial resources and operational reach, employing over 4,000 people across the U.S., Costa Rica, and India. This global footprint supports its focus on specific types of debt portfolios.
With decades of experience, MCM specializes in acquiring defaulted consumer receivables such as credit card, telecommunications, and utility accounts. The company typically purchases accounts that have been inactive for at least 180 days or where minimal payments have been made during that time. This targeted approach offers major banks and credit unions a dependable way to offload large portfolios. By 2021, MCM had helped over 7 million consumers resolve their debts.
In 2011, MCM introduced the first Consumer Bill of Rights in the industry, highlighting its commitment to ethical and consumer-focused collection practices. However, sellers should also consider MCM's regulatory history. In October 2020, the Consumer Financial Protection Bureau (CFPB) reached a settlement with Encore Capital Group and MCM for violations of a 2015 consent order. This settlement required $79,308.81 in consumer refunds and a $15 million civil penalty. It also mandated clear disclosures and restricted the collection of time-barred debt without proper notifications for five years. Despite this, MCM's Consumer Bill of Rights underscores its dedication to ethical practices, which can help protect a seller's brand during debt transactions.
"In 2011, we introduced the industry's first Consumer Bill of Rights codifying our commitment to working with our consumers through mutual engagement, understanding, collaboration and respect." – Midland Credit Management
MCM maintains a strict no-resale policy, ensuring accounts are never sold to other debt buyers, though they may be transferred back to the original creditor in certain cases. With annual revenues exceeding $1 billion and net income over $75 million, MCM demonstrates financial stability. The company is accredited by ACA International and uses DigiCert to secure its digital operations. These transparent practices help sellers make informed decisions.
Sellers considering MCM should carefully review the company's compliance history, particularly the 2015 consent order and the 2020 CFPB settlement, to ensure alignment with their risk management strategies. The Consumer Bill of Rights serves as a reassurance of ethical practices, helping to safeguard brand reputation during debt transfers. While MCM’s financial strength and operational scale offer a reliable option for large portfolio sales, sellers must weigh these advantages against its regulatory background before proceeding with any transactions.
Crown Asset Management (CAM), established in 2004 and headquartered in the Greater Atlanta area, has acquired over 500 consumer credit portfolios. The company has been recognized as a top employer in collections from 2020 through 2025.
CAM focuses on purchasing non-performing consumer credit portfolios, specifically in six key areas: credit cards, automobile loans, consumer loans, marketplace lending, judgments, and specialty portfolios. By acquiring charged-off accounts, CAM provides creditors with the opportunity to generate immediate cash flow, enabling them to reinvest in their primary business operations. This targeted approach has helped CAM build a strong reputation within the industry.
CAM holds the RMAI Certified Receivables Business designation (Certification #C1408-1023) and has earned an A+ rating from the Better Business Bureau. The company is actively involved in organizations like ACA International, the National Creditors Bar Association, and the Consumer Relations Consortium. CAM operates through an outsourcing model, partnering with a carefully vetted nationwide network of collection agencies. These agencies are regularly audited for data security, licensing, and dispute resolution practices.
"Crown Asset Management, LLC is recognized by RMAI as a Certified Receivables Business, signifying our commitment to best practices and high standards throughout our organization." – Crown Asset Management
CAM follows a Compliance Management System that aligns with the CFPB's Supervision and Examination Manual. The company’s leadership team - CEO Brian K. Williams, CFO Scott E. Arnold, and General Counsel Joel S. May - brings decades of expertise in receivables management. Sellers interested in portfolio reviews and valuations can contact Senior VP Bob Deter. CAM also ensures its partner agencies meet rigorous compliance standards through a vendor management program that includes thorough background checks. These transparent acquisition practices reinforce CAM's reputation for reliable and ethical portfolio trading.
Because CAM outsources all account servicing to third-party agencies, sellers are encouraged to review both CAM's compliance history and the standards upheld by its partners. The company’s consumer-focused philosophy prioritizes treating debtors "with dignity and respect" and provides direct access to its Chief Compliance Officer for dispute resolution. This approach not only offers sellers immediate liquidity but also ensures rigorous compliance oversight across CAM's network of collection partners.
Cascade Capital Group is a specialty finance firm focusing on consumer finance and healthcare sectors. With over $25 billion in receivables handled and 46.8 million transactions processed, the company has established itself as a major player in its field. Cascade Capital acquires debt portfolios and entrusts their servicing to its sister company, Cascade Receivables Management (CRM).
Cascade Capital supports a broad range of asset-based financing across various debt types. These include consumer loans, auto loans and leases, small business loans, and alternative financing options like revenue-based financing, invoice financing, and merchant cash advances. Beyond these, the company also manages specialized assets such as intellectual property, royalties, and income share agreements - essentially any asset that generates consistent cash flows. Their platform automates critical processes, including reporting and payment schedule generation. This versatility demonstrates the firm's ability to handle a wide array of financial assets efficiently.
Cascade Capital has built its reputation on a compliance-first philosophy, ensuring strict adherence to regulatory standards. The firm is licensed in states where passive asset buyers are classified as creditors or collection agencies, emphasizing its dedication to treating consumers with dignity and protecting the brands it represents. To further assist consumers, Cascade offers resources like the "CascadeHelps" FAQ platform, which educates individuals on navigating the collections process and understanding their rights under the CCPA.
"We protect your brand image through strict adherence to a high level of compliance and oversight. You can rest assured that we will treat your customers with dignity and respect." – Cascade Capital
Cascade Capital employs proprietary due diligence methods supported by extensive big data analytics to evaluate portfolios. Their platform processes 30 times more data points than traditional methods and spans 11 different debt types. It also integrates seamlessly with over 20 database systems - including Snowflake, BigQuery, Postgres, and MySQL - in under 30 minutes, eliminating the need for API documentation. This capability enables swift portfolio evaluations and bids across asset classes, while offering real-time tracking of cash flows and collateral metrics.
"Timely data is critical to fintech transactions as it allows us as investors to make certain consequential decisions throughout the life of the facility. The fact that Cascade was also able to serve as our data agent was very helpful in closing the transaction." – Tufuantsi Daniel, Senior VP at Cordiant Capital
Cascade Capital provides no-obligation, cost-free valuations for non-performing accounts receivable portfolios. Sellers can choose from multiple liquidity options, such as outright purchases with upfront cash or asset-backed loans that maintain their control while providing immediate cash flow. Users report a 90% reduction in time spent on reporting and a 75% acceleration in transaction closures. The firm’s adaptable deal structuring, including forward flow arrangements, appeals to sellers with unconventional or niche assets.
Sherman Financial Group stands out in the debt-buying industry with its focus on distressed consumer debt portfolios. As one of the largest buyers of such debt in the U.S., the company serves as a one-stop provider of debt recovery solutions for financial institutions, credit card companies, and retailers. Since its founding in 1997, Sherman has established a strong foothold in the market, reporting revenues of about $1.25 billion in 2009.
Sherman Financial Group zeroes in on charged-off consumer credit and bankrupt accounts. Its acquisition strategy revolves around distressed consumer debt portfolios originating from banks, credit card issuers, and retail businesses. By focusing exclusively on consumer receivables, Sherman has developed a deep understanding of this niche.
The company's reputation was bolstered in September 2007 when senior management acquired a controlling 54% stake. This included purchasing a 34.7% stake from joint venture partners Radian Group Inc. and Mortgage Guaranty Insurance Corporation for a total of approximately $518 million.
"Sherman Financial is the largest buyer of distressed consumer debt in the United States and a single-source provider of debt recovery solutions for financial institutions, credit card companies, retailers and others." – Cleary Gottlieb
In a highly concentrated industry where the top ten debt buyers account for over 80% of all credit card debt purchases, Sherman holds a prominent position. Its subsidiary, LVNV Funding, typically owns the purchased debt portfolios and is listed on consumer credit reports as the debt owner. This strong presence allows Sherman to maintain flexibility in its acquisition strategies.
Sherman Financial Group simplifies debt recovery for sellers by offering a single-source solution. It tailors portfolio acquisitions to meet specific size and geographic preferences. Additionally, Sherman occasionally sells accounts from its own portfolio to streamline operations or focus on debt types that align with its strengths, offering adaptable deal structures. Like most debt buyers, Sherman acquires delinquent accounts at a fraction of their face value, though pricing specifics remain confidential.
Sellers working with Sherman must ensure compliance with federal laws, including the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA), as Sherman is classified as a debt collector under these regulations.
LVNV Funding LLC, a part of Sherman Financial Group, specializes in acquiring large portfolios of charged-off consumer debt. Headquartered in Greenville, South Carolina, the company buys delinquent accounts from major creditors like Credit One Bank, Citibank, J.P. Morgan Chase, SoFi, and Sears Mastercard. While LVNV owns these portfolios, it outsources the actual collection process to Resurgent Capital Services.
LVNV Funding primarily targets consumer debt portfolios, including credit cards, personal loans, installment loans, and debts for services provided. These accounts are acquired both domestically and internationally from original creditors and other debt buyers. Typically, the accounts they purchase have been charged off after 120 to 180 days of non-payment. Their business model revolves around acquiring large volumes of debt at deeply discounted prices - often between 4 to 7 cents on the dollar. This strategy plays a key role in shaping their approach within the debt-buying industry.
Despite receiving over 1,000 complaints in just three years, LVNV Funding has maintained a BBB A+ rating since 2017. The company emphasizes working exclusively with "fully licensed, reputable, trustworthy companies". However, consumer protection attorneys have criticized LVNV for allegedly attempting to collect on old or invalid debts, sometimes pursuing consumers even after the statute of limitations has expired. Additionally, the company has faced legal issues, including a $10,000 penalty for filing a lawsuit without adequate supporting documentation.
For sellers, it’s important to understand that LVNV’s operations rely on purchasing debt at steep discounts and recovering funds through settlements or legal actions. Sellers must provide thorough documentation during the sale, comply with the Fair Debt Collection Practices Act, and clearly disclose the age of the debt. These steps are crucial, as LVNV has faced legal scrutiny and consumer complaints over issues like debt validation and attempts to collect on time-barred accounts.
Selecting the right debt buyer involves evaluating several critical aspects to ensure a successful and compliant transaction.
Compliance standards should be a top priority. Reputable debt buyers follow regulations like the FDCPA, FCRA, GLBA, and TCPA. It’s essential to confirm that the buyer holds proper licensing and has adequate insurance coverage. This ensures they operate within legal boundaries and protect your interests.
Financial stability and transparency are equally crucial. Check the buyer’s audited financial statements to confirm their long-term stability. For publicly traded companies, reviewing their TTM (trailing twelve months) revenue data can provide insights into their operational strength. Additionally, examine their regulatory history and any enforcement actions to ensure they maintain ethical business practices.
Portfolio specialization is another critical consideration. Debt buyers often specialize in specific types of debt, and it’s important to choose one with expertise in the type you’re dealing with. Buyers typically pay between $0.04 and $0.14 per dollar of face value, allowing settlements for 20% to 30% of the balance. Ask whether the buyer plans to resell the debt. As noted in OCC guidance:
Each time account information changes hands, risk increases that key information will be lost or corrupted, calling into question the legal validity and ownership of the underlying debt.
Lastly, assess the buyer’s reputation. Look into their BBB ratings, the volume of complaints against them, and any professional certifications they hold, such as CLLA certification from the Commercial Law League of America. Reviewing their client base can also offer clues - buyers who work with Fortune 500 companies or major U.S. banks often adhere to higher standards. However, past FTC findings have highlighted poor documentation practices among some large buyers.
To protect yourself, establish clear contractual terms. These should include restrictions on resale, requirements for subsequent purchasers to meet the same due diligence standards, and the use of data "scrubs" through transactional sampling to ensure account information remains accurate and complete. Following these steps aligns with the best practices employed by leading debt buyers.
Understanding the debt buyer market plays a key role in maximizing recovery and safeguarding your reputation. Every year, the debt buying industry helps return billions of dollars to creditors, which, in turn, increases access to consumer credit and lowers its overall cost. However, original creditors can still face accountability for improper collection practices carried out by the agencies or buyers they work with. This makes it essential to carefully select the right buyers.
Given the high concentration in the market, scrutinizing buyer records is crucial. For example, back in 2007, just ten buyers were responsible for purchasing 81% of all credit card debt. This level of concentration underscores the importance of choosing a partner with the right expertise. Aligning your portfolio with a buyer who specializes in your asset class can significantly improve your returns.
Make sure to verify buyer certifications through independent audits, like those offered by the International Receivables Management Certification Program. Additionally, review their documentation practices to avoid legal complications that could negatively affect your portfolio's market value.
Whether you're selling consumer debt, medical accounts, or auto loans, working with buyers who specialize in your asset class and uphold strong compliance standards is key to a successful transaction. By applying the strategies outlined above - rigorous documentation checks, certification reviews, and aligning with the right expertise - you can secure the best possible returns. Take the time to evaluate potential buyers thoroughly and focus on those who align with your business goals and risk tolerance.
To determine if a debt buyer is operating within the law, start by checking their compliance with federal and state regulations, such as the Fair Debt Collection Practices Act (FDCPA). Licensing is another key factor - confirm their credentials through the appropriate state agencies, as licensing rules differ from state to state. It's also a good idea to look into their compliance history. This includes researching any enforcement actions or complaints filed against them. Lastly, make sure they adhere to ethical standards and align with Consumer Financial Protection Bureau (CFPB) guidelines, which reputable buyers typically follow.
When selling a debt portfolio, it's essential to include an electronic file containing key account details, such as account numbers, balances, and statuses. This helps buyers verify and evaluate the debts effectively. Along with this, provide supporting documents like contracts, payment histories, and account statements to establish the legitimacy of the debts.
Additionally, include information about the debt's age, current status, and any previous collection attempts. If applicable, attach relevant legal documents to ensure transparency. Having accurate and thorough documentation not only builds trust but also helps streamline the transaction process.
Whether or not to restrict a buyer from reselling your accounts depends on what you’re trying to achieve. Many debt buyers rely on reselling or collecting on portfolios as a core part of their business operations. If you want to prevent resale, you can include specific clauses in your contracts to outline these restrictions. However, doing so might narrow your options or make negotiations trickier. It’s a good idea to consult a legal expert to ensure the terms align with your goals and safeguard your interests.
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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