Looking into debt for sale in the UK? Here at EverChain UK, we work with a wide range of UK buyers and sellers, offering the largest selection of debt portfolios you can find anywhere. To help you get started, we’ve explored some of the key factors that make up debt sale below:
What is Debt Purchase?
As you can probably guess from the name, debt purchase is a way for lenders to sell on debts that have become overly time consuming, costly, or simply too difficult to recover inhouse. For the buyer, debt purchase offers an opportunity to purchase debts at a considerably reduced rate, and then make a profit once they collect a proportion of the debt.
Essentially, debt purchase is about matching the right seller with the right buyer. At EverChain UK, we do all that we can to make this process as simple and streamlined as possible. This includes providing tools such as filters, which allow you to identify portfolios that meet your investment criteria, as well as alerts, which will notify you when a suitable deal is listed.
Buying Debt from a Network
Within the financial services industry, there is an increasing focus on delivering the best outcomes for customers, treating all customers fairly, and being mindful of vulnerable individuals. Complaint handling is also becoming ever more important. With this in mind, it’s essential that when buying debt, you make an informed decision.
This is particularly true of portfolios that have come from firms that have since become insolvent, as although the loan books remain valid, they will be considered high risk. This is because typically, a large percentage of the portfolio will be customers that have been issued a default notice.
What is a Default Notice?
If you come across debt for sale where a default notice has been issued, you may be unsure as to what this really means. A default notice is a letter that is sent when a borrower falls behind on their repayments. It will give the consumer at least two weeks to bring their account up to date, and if they are unable to do so in this time, the account will default and further action could be taken.
Typically, a default notice is only sent out when less than the full amount has been paid for between three and six months. This does mean that even if contributions have been made, if the due repayments haven’t been met, a letter might be sent.
Types of Debt for Sale UK
Before purchasing a debt portfolio, it’s essential to consider what kind of debt you’re buying. Examples include personal loans, credit cards, bad credit loans, and payday loans. Some debt will be easier to liquidate or market, while others are more common, thus you can get a much larger portfolio. Make sure you do some research beforehand, and familiarise yourself with all the appropriate regulations and guidelines.
When buying debt, the type of loan isn’t the only thing that matters. You also need to evaluate the information you’re provided with by the debt sale network. While you probably won’t be able to see each individual loan in detail, you should be able to access the following information:
- The original creditor or issuer of the debt
- The number of accounts within the portfolio
- The average balance of the loans
- The total principal balance of all the loans in the portfolio
- The purchase price of the portfolio
When you join EverChain UK’s certified buyer network, you’ll also be able to see things like payment histories, masked loan agreements, and seller due diligence reports. Not only this, but you can additionally review an analysis of the portfolio from major scoring companies.
UK Debt for Sale
When it comes to debt for sale, UK lenders are often keen to pass on older debts, as they would prefer to concentrate their resources in other areas. There comes a point where the creditor is spending more money chasing a debt than it’s really worth. Debt buyers tend to have more flexibility in terms of collections and should thus be able to make a profit when purchasing a portfolio.
So how do you go about buying debt for sale? With EverChain UK, the first step is to join our network and become a certified member. Then, simply browse the portfolios on offer, and identify any that meet your buying criteria. You can analyse the portfolio, then submit your bid. Finally, once the offer has been accepted, you can use our post-sale management platform to resolve any issues or queries with the original lender. Get in touch with us today to discuss your buying requirements!