Good opportunities in Bad debt.

By Larry Singer DCFS

Although credit card debt is the most common delinquent debt and the easiest to transact, there are many other sources of delinquent debt that you should be seeking, which can add new dollars to your bottom line.

This article is exploring the new and revisiting the best of the old reliable sources of delinquent debt. 

New and experienced brokers alike often ask us, if delinquent debt is an area of the cash flow industry that offers opportunities for growth and income. The answer to both is yes. Traditionally, when brokers thought of purchasing portfolios of delinquent debt, credit card debt was the only thing that came to mind. Not so any more.

First let's not forget about our best seller for years, Delinquent Credit Card debt. Take a good look around you. Look for regional and local financial institutions that issue their own credit cards. In many cases you're in an ideal position to offer something they may not get from their current buyer…Personal attention. Establish close relationships with the decision-makers at the banks that have their own credit cards. Contact the Recovery Officer, and I think you will be surprised just how much delinquent debt they have on the books. Many sell it off periodically, however, as brokers you can be in a position to purchase portfolios through a negotiation process instead of a bidding process. This is by far the best way for you to set up a steady account flow. Relationship building can keep you out of the bidding wars, and that is where you want to be. The banks will get to rely on you to purchase their debt periodically in order to turn a liability into an asset.


Department store credit cards:
This debt is almost as good as traditional credit cards. The collection process for stores is a time consuming task. Set up a continuous flow of bad debts directly from their accounting department to an investor, so that the retailer can count on turning these bad accounts into good cash, every few months. That's what we call "flow forwarding". With the proper referral, you could preclude the debt being sent to other outside collectors.

Delinquent Installment contracts:
Look to your regional retail outlets that offer purchases on time--- furniture stores, appliance stores, carpet outlets and health clubs just to mention a few. They very often carry their own paper, and more than likely have a basement full of delinquent accounts. Establish a relationship with the credit department that will put you in a position to purchase these accounts before they are sent out to private collection agencies. The client will get more for the portfolio and you will earn more.

Student Loans:
There are trade schools all over these United States, and they are filled with loans from students who had good intentions to pay back their loans, but for one reason or another just didn't get around to it. We have recently received several portfolios from technical trade schools. All you have to do is open your Yellow Pages and you will find your prospects right there under "Schools". They will be thrilled to give you the opportunity to turn their "reserve for bad debt" into cash.

Delinquent time share portfolios:
These also open the door to purchase performing portfolios to give these organizations the cash they need, now, for seasonal repairs.

Ambulance services:
The personal-pay portion of the services, not covered by insurance, along with other specialty medical related services is emerging as a growth area.

Bail bond companies:
These companies, which many of us never think about, are holding (against their will) bail bonds that have been forfeited. These, in most cases have two individuals who have signed indemnification agreements, and who are jointly liable for the payments. 

The point is, that there are new delinquent debt portfolios everywhere; and therefore, there are opportunities for you to not only make money in this intriguing area, but to use it to get your foot in the door and broker performing portfolios and other debt instruments. 

Always keep in mind the general guidelines for delinquent debt.
-Look for millions of dollars
-Submit an executive summary including the following:
-Type of portfolio;
-Dollar size of total portfolio;
-Number of accounts included;
-Average balance of accounts;
-Geographic distribution;
-Aging from the date the last payment was received;.
-The number of collections agencies to which it has been sent, ( if any);
-Is the data available on a computer spread sheet or disk?
-Is there documentation available? 
-Does the portfolio come with warranties?


Commercial Delinquent Debt:
Commercial debt is that which is created as a result of one business dealing with another business. That's right, these accounts that are sitting in the traditional "reserve for bad debt" or have been charged off, may be worth cash to your clients. 

Whereas we are looking for millions of dollars of consumer debt, we are now able to purchase commercial debt if the portfolio is a minimum of $30,000 with an average account balance of $3000. This creates opportunities for you to offer your factoring clients more services and make money for yourself in the process. We will be writing a lot more on commercial debt, so keep you eyes open with your clients.

Good opportunities in Bad Debt are everywhere. Give it a try.


Larry and Marilyn Singer, DCFS, are master Brokers of Delinquent Debt and Pino Training organization training organizations visiting instructors. With 35 years in advertising and marketing, Larry is also is an adjunct professor at the University of Buffalo in its Communication department. Larry and Marilyn own Capital Funding Group. Snyder, New York.  Their book, Brokering Delinquent Debt for Fun and Profit, is a Best Seller and a must read for those interested in this fascinating area of the Cash Flow Industry. It is now available for immediate shipping. .