The question every creditor asks before selling: how much is my debt actually worth? The short answer is whatever an investor is willing to pay for it. The long answer depends on five factors.
1. The debtor's solvency
This is the most important factor. A debt against a trading company with assets is worth far more than one against a dissolved corporation or an insolvent individual. Buyers investigate the debtor before making an offer: business status, assets, registered security, other proceedings.
2. The age of the debt
The more recent, the better. Debts under a year old sell at smaller discounts; after three or four years the discount grows sharply. Remember the provincial limitation periods: in most common-law provinces a debt becomes statute-barred 2 years after the claim is discovered, though the clock can restart on acknowledgement or part payment. You can review Ontario's rules in the Limitations Act at ontario.ca.
3. The available documentation
Signed invoices, delivery slips, contracts, or a written acknowledgement of debt multiply the value. A debt with no paperwork has almost no market.
4. Whether there is a court judgment
A debt with a court judgment removes the legal risk — only the collection risk remains — and commands a better price. Some investors, on the other hand, prefer debts without proceedings so they can run the claim themselves.
5. The total amount
Very small debts attract less interest because fixed recovery costs weigh too heavily, and very large ones shrink the pool of potential buyers. Grouping small amounts into a portfolio makes them attractive.
As a guide: recent, documented debts with a solvent debtor sell at discounts of 20–40%; medium-risk debts at 40–70%; old or hard-to-collect debts above 70%, or simply "open to offers".
What discount should I apply?
On Debtalia we recommend listing with a minimum 20% discount in CA$ and marking the price negotiable: the market quickly tells you whether your expectation is realistic. Debtalia is a marketplace connecting sellers and buyers directly, with no commission on the sale and fully anonymous listings.
The cost of not selling
Always compare with the alternative: years of court action, filing fees, lawyers, and the real chance of collecting nothing if the debtor becomes insolvent. A reasonable discount today is usually better business than an uncertain claim tomorrow.
