Explain how debt is actually a product that is bought and sold
Have you ever wondered what happens to your debt after you default on a loan or stop making payments? Well, the answer is that debt can actually become a product that is bought and sold.
When a lender or creditor is unable to collect on a debt, they may choose to sell it to a debt buyer. This debt buyer then becomes the new owner of the debt and is responsible for collecting on it. The debt buyer usually pays a fraction of the original debt amount, sometimes as little as pennies on the dollar, and then tries to collect the full amount from the borrower.
This process of buying and selling debt is called debt brokerage and has become a thriving industry. There are many companies and debt buyers who specialize in purchasing and collecting on defaulted debt.
So, if you're having trouble paying your debts, it's important to know that your debt may end up in the hands of a debt buyer. This can have a significant impact on your credit score and future financial well-being, so it's important to understand the process and work with a financial advisor to come up with a plan to pay off your debts.
