Open Book

Investing in Debt

Understanding the Opportunities of Investing in Performing Debt.

Household Consumer Debt in the US is currently at an all-time high of $21.5 trillion. Consumer Debt consists of personal debt that results from individuals purchasing goods or services for personal or household consumption. Credit card debt, student loans, auto loans, mortgages, and payday loans are all examples of Consumer Debt.

Performing debt is generally between a creditor and debtor that is actually being paid on. The debt owed is renegotiated and compromised at less than the amount outstanding (usually between 50% to 70%) if the payment can be settled immediately. Debtors are motivated to settle their debt quickly in order to avoid or restore poor credit ratings.

Debt settlement companies are companies renegotiating, settling, or changing the terms of a person's debt to a creditor or debt collector. It is customary in the debt settlement industry for companies or individuals who are acquiring large amounts of debt to utilize a third-party Debt Settlement Company to verify current market pricing, potential liquidity, and the debt's collectability. Such due diligence is used to validate and determine the viability of the debt as an asset that will have a sizable return on investment. It is also a standard in the industry that outsourced collection agencies are used to do the actual collection of the debt. Federal and state regulations oversee these companies.