Debt Collector Lump Sum Discounts

Junkee on 22/05/2018 - 09:36

Hey guys, long story kind of short.. I recently moved interstate and for a few months I was unemployed. I had a personal loan with Commonwealth bank which they kindly put the repayments on hold for me under financial hardship for a few months while I was looking for work. When setting this up I specifically asked them that once the 3 months are up, will everything go back to the way it was before, which I was told yes.

Fast forward a few months and I knew the financial hardship had come to an end and expected my auto repayments to continue once again. A week later I receive a letter from the bank stating that my debt has been sold to a debt collecter. I called to find out why and I find out they didn't set back up the auto repayments and I missed a payment. So it's dodgy what they did because I wasn't notified until they had already sold the debt but it could potentially work out better for me anyway.

I called the debt collection company yesterday and found out they can do a pretty decent discount if I can pay the debt off in full which I should be able to do hopefully within a couple weeks. I know they pay almost nothing to buy these debts off the banks.

The amount owing is roughly $20k and the guy has told me he can easily take 20% off if I pay in a lump sum. Just wondering if anyone has had any experience with debt collectors and how much of a discount I would be able to push for? Thanks in advance.

Financial

Comments

  • angelkulit025 on 22/05/2018 - 09:39
    +4

    Push for 30%, there's no harm in trying.

  • [Deactivated] on 22/05/2018 - 10:05

    Does this hurt your credit score if the bank sold your debt to someone else? Just out of curiosity.

    • Junkee on 22/05/2018 - 10:15

      I expected it to, but as far as I can tell so far they have not put a strike against my cretit score. I will be able to confirm in 2 weeks when I get my record sent out. Possibly just a red flag against my name within the bank itself.

    • [Deactivated] on 22/05/2018 - 16:44

      If the bank is going to lose 90% of the loaned amount, I'm pretty sure they're listing someone somewhere somehow.

  • Settero on 22/05/2018 - 10:16
    +2

    push for 50% its a stretch but possible. they buy it for very low, it all depends on whom you are talking to and how much the actual debt cost them. most will buy it for 10-40% of the amount owed.

    • Hybroid on 22/05/2018 - 10:19

      This is usually correct advice. Debt collection agencies buy debt for fractions of the amount, knowing that majority will never be paid back fully.

  • [Deactivated] on 22/05/2018 - 10:25

    You can do any deals you see fit with the debt collector, but keep in mind that your credit score would've already taken a massive hit from this. Commonwealth Bank would have recorded a default against you, potentially reducing your chances at obtaining further finance for a considerable amount of time, and potentially never with CBA. This cannot be reversed, because Commonwealth Bank have already settled this debt with the collector and written the value off at their end.

    Two weeks, however, may not be enough time for you to see this default appearing on your credit record. Perhaps you could try after ~2 months. And a reminder to check all credit bureaus for a complete picture of what forms your credit record.

  • Changskies on 22/05/2018 - 10:29
    +3

    take this with a grain of salt. Debt collectors buy bad loans from 3%-15% of the loan amount in general loan that has no security. Debt collectors will in average make 40% -80% because in AU repayment rate is still high. it is possible to make 20-40% off your amount WITHOUT bulk discount. level 1 is around 20-30% d/c and level 2 is 40-60% d/c. A lot of bluffing will be required. Never give them confidence of your security (ft job); bluff in 40-50% dc range.

    e.g. propose that you will pay in full - one time payment by borrowing money from fam. get about 7 day extension on pay periods

    Call 3 days later and say you only got 40% of your total debt and cant source any more. call the next day and say you got 10% more. see if they bend and take it hence they make money if not, barge higher.

    make sure you make note of every call and names in case you need to check on credit report.

    if an agreement is reached they cannot list you however your bank can list you internally, but who cares your bank is a dick

    DYOR please in case im wrong

    • [Deactivated] on 22/05/2018 - 11:36
      +1

      if an agreement is reached they cannot list you

      The debt collector can't, but the bank most certainly will. In fact they probably already have made a listing.

      • subywagon on 22/05/2018 - 12:16

        My relative made them email a statement of the conversations and any agreements reached via telephone before he would make any payments to ensure everything was acted upon that was agreed to.

        • [Deactivated] on 22/05/2018 - 12:22

          Absolutely - retain as many written records as possible.

      • subywagon on 22/05/2018 - 12:31

        The debt collect puts a note next to the debt saying it's been cleared. I forgot what the correct term is. My relative had to do all this in order to get a mortgage, and it worked even with bad credit.

  • MeesusEff on 22/05/2018 - 10:42

    push for 40-50% if its a big debt (over $20k). if under they will most likely do a 10-25% discount. But you will need to be prepared to pay it off right away with a debit card (credit will likely incur a cash advance fee).

  • tsunamisurfer on 22/05/2018 - 11:24

    I don't see anything dodgy here.

    The bank is well within it's rights to on sell this exposure, especially given the track record of it's borrower.

    The bank needn't tell you in advance.

  • subywagon on 22/05/2018 - 12:14

    Yeah push for as big as a discount as possible. My relative did this and he got a huge discount. I can't remember the amount now though unfortunately, but it may have been at least 50%. The worse they can say is no. Just continue to negotiate.

  • Sofie519 on 22/05/2018 - 12:40
    +4

    Offer a genuine 30% of the debt and start negotiations from there. Dont disclose the fact that you found a job or can actually afford 80% in a few weeks. Tell them that you applied for financial hardship before CBA sold your loan to them and you are in the process of seeking advice to declare bankruptcy as you have no assets and a lot of debts. Let them put your loan into the 'difficult' pile …

    If they accept 30%, you might be able to convince your elderly parents to use their life savings to rescue you from your debt, but anything more, you wont impose on them.

    Just see where it takes you.

  • Micko179 on 23/05/2018 - 09:24
    +1

    Do you have any plans to borrow money in the next 5 years? If not, then tell them not to contact you again. By law, they are not allowed to harass anyone.

    If you want to borrow money in the next 5 years, then put on your best 'Poker Face' & deal with them. Just remember, they're the best poker players in the business so stick to your guns, do not blink or go off course, ensure they believe that if they don't accept your 'offer' you will just go 'bankrupt' as your life couldn't get any worse than it already is(very important you don't disclose current employment or other details etc).

    Ps: They will take as much as they think they can get out of you(fact), but if they believe that you will go Bankrupt otherwise, then they'll accept as little as 10-20% of the original debt!(fact)

    I hope this helps.

  • miwahni on 23/05/2018 - 18:39

    Very unusual for CBA to onsell your debt after just one week as there is a process in place that must be followed, and the wheels turn slowly.

    Having said that, you can guarantee that the default will be listed against you at Equifax and / or Dunn & Bradstreet. Due the amount involved, and the fact that it was listed by a financial institution, it is extremely unlikely that you will get credit approved again in the next five years.

    In addition, a lot of debt collection companies will list a second default, to show that they have taken the debt over. Two unpaid defaults are going to hammer your credit score into the ground. And if you negotiate the debt down with the collection agency, when you've paid the negotiated amount the default won't show as Paid, rather it will show as Settled, which is another red flag for other lenders.

    So if you're thinking of borrowing money / changing mobile phone providers / using a different electricity provider in the near future, you could have issues. Good luck with this.

  • ozbjunkie on 23/05/2018 - 19:48
    +1

    Report back with your success story please!

  • [Deactivated] on 23/05/2018 - 20:53
    -1

    I'm guessing this a small amount (less than $2000). I wouldn't pay it if the debt has been sold. If it was going to hurt your credit score it would have happened already and paying it isn't going to get that taken off but they will update it.

    • Micko179 on 24/05/2018 - 08:59

      OP clearly stated debt is around $20k!

    • miwahni on 24/05/2018 - 09:29

      NOT paying it means it sits on your credit report even longer, as an unpaid default.

      • [Deactivated] on 25/05/2018 - 21:03

        Paid or not doesn't make a lot of difference the default is still there.

        • miwahni on 27/05/2018 - 00:41

          Oh absolutely. But as a credit manager, if I see a paid default, I ask for an explanation. If I see an unpaid default, I just decline. Easier to lend money to people with good credit histories, not dick about with non- payers.

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