- 14 Mar, 2022
If you’re looking into debt portfolios for sale, you’ll want to know you’re getting a good price, while also being confident that you’ll get a good return on your investment. This can be a pretty hard balance to get right, but there are a few things you can do to improve your chances! We’ve explored the topic of debt portfolios in more detail below:
What is a Debt Portfolio?
As the name suggests, a debt portfolio is a collection of debts that you can purchase, which can be a good investment opportunity. The idea is that you’ll buy the debts at a low price - usually at pennies on the pound - and that way, when debtors do make a repayment, you’ll soon be in profit. You don’t need to bring in a lot of payments to start making money, as you would have bought the debts at such a low price.
For example, say you bought a debt of £1,000, for the price of £100. You’re entitled to collect the full balance of the debt, so if you were able to do this, you’d have made £900 in profit. This may take some time, but debt buying can be incredibly lucrative.
The Debt Sale Process
When it comes to the debt selling and buying process, firstly, lenders will put together a portfolio of debt they no longer feel able to collect. They would have issued a default notice to the borrower, explaining that further action, such as the selling of the debt, could be taken. The main reason lenders will sell such debts is because they are not specialists in arrears collections. Debt collectors may also have more flexibility when it comes to their collections methods.
Debt buyers will look at a number of different portfolios and identify the ones they wish to purchase. They’ll then bid on them, and once bought, they can then start the collections process. This may include taking the debtor to court and issuing a County Court Judgement (CCJ), along with an Attachment of Earnings Order (AEO). With an AEO, monthly contributions towards a debt are taken directly from the borrower's wages, and are automatically sent to the creditor or debt collector.
What Sort of Debt Portfolios Are for Sale?
When looking into debt portfolios for sale, there are a few things you should think about. The initial consideration should be what kind of debt you’re interested in buying. As you can probably imagine, some types of loan are more popular than others, so you may wish to opt for a larger portfolio. Alternatively, you could choose a type of loan that is easy to liquidate.
The main thing is doing your research beforehand. You should find out more about each form of loan, as well as the financial industry in general, so that you can confidently choose a portfolio. Some of the most common types of debt include bad credit loans, personal loans, credit cards, and payday loans.
Details of a Debt Portfolio
Once you’ve decided which type of debt you’re interested in purchasing, you can then start comparing relevant portfolios. Usually, each portfolio will contain debts that share particular attributes, such as the time that has elapsed since the loan was defaulted. You’ll also be provided with other details about the portfolio, including:
- The type of debt it contains, such as credit card debt, payday loans, or personal loans
- The name of the creditor or creditors who initially owned the debt
- The total amount of money that is due within the portfolio, sometimes referred to as the face value
- The median debt balance
- The number of accounts that are contained within the portfolio
You’ll also be told the price to buy the portfolio, or where bidding starts. As mentioned above, this is typically far below what the total debt is worth, so it should be relatively easy to make a profit.
How to Find Debt Portfolios for Sale
With EverChain UK, it’s simple to find debt portfolios for sale! After joining our certified buyer network, you can start browsing our portfolio listings to find a suitable deal for you. You can furthermore use our advanced filtering tools to narrow down your search, ensuring you only see portfolios that meet your investment criteria. And if you can’t find exactly what you’re looking for straight away, you can set up alerts to notify you when the right portfolio becomes available.
Once you’ve found a portfolio that interests you, you can review it in more detail by looking at things like loan agreements, payment histories, as well as lender due diligence surveys. Then, simply submit your bid, which will be quickly reviewed by the seller. After the offer has been accepted, you can close the sale, and then use our post-sale management system to perform actions like communicating with sellers to request any information you need.
If you’re interested in buying debt with EverChain UK, you can visit our Debt Buyers page, or get in touch with us directly to discuss your needs.