While some people want to get rid of their unpaid receivables, others have turned them into a business: buying debt at a discount is one of the most profitable alternative investments when done properly.
The business model
It is simple: buy a receivable for a percentage of its face value (say 40%) and recover a larger amount — by negotiating a partial settlement with the debtor, enforcing through the courts, or waiting for their finances to improve. The gap between what you paid and what you recover, minus costs, is your return.
Example: you buy a CA$15,000 debt with a court judgment for CA$6,000. If you recover CA$12,000 through garnishment, the gross return is 100% on the capital invested.
Who buys debt in Canada?
From large funds acquiring bank and telecom portfolios to law firms buying individual receivables to enforce with their own resources, plus specialised small investors. You do not need to be a fund: many deals are for amounts between CA$2,000 and CA$50,000.
The four keys to valuing a deal
- The debtor's real solvency: check business status, assets and registered security before offering.
- Documentary quality: insist on seeing invoices, contracts or the judgment before signing.
- Litigation status: is there a judgment? Enforcement under way? Property registrations?
- Limitation: confirm the provincial limitation period and any acknowledgement that restarts it.
Risks to bear in mind
The main one is obvious: not recovering your investment if the debtor is insolvent. Also legal costs if you must litigate, long recovery timelines, and the need for legal know-how. Diversifying across several smaller deals mitigates the risk. If you plan to collect from consumers, review your obligations at the Financial Consumer Agency of Canada.
How to start on Debtalia
Debtalia is a marketplace that connects buyers directly with sellers; it does not sell its own debt and takes no commission. You browse anonymised listings showing amount, price, type of debt, province and documentation, then contact the seller directly to negotiate without intermediaries.
Conclusion
Buying debt at a discount can deliver returns far above traditional investments — provided you value each deal carefully and diversify. Done well, it is a disciplined, data-driven business, not a gamble.
