Collect or sell a debt?
Faced with non-payment you have three routes: claim yourself, hire collection or sell the debt. None is always best. Here you compare the cost, time and risk of each to decide with judgement.
The three routes to non-payment
When someone will not pay you can claim yourself (out of court or in court), hire collection from a specialist firm, or sell the debt to an investor. Each route changes who bears the risk, how long until you see money and how much it costs you. The right call depends on your case: the debtor's solvency, the documentation and your need for liquidity.
Cost, time and risk compared
| Criterion | Claim yourself | Collection | Sell |
|---|---|---|---|
| When you see money | Months or years | When they collect | On closing the sale |
| Upfront cost | Fees, lawyer, court | Success commission | Only the listing fee |
| Who bears the risk | You | You (if not collected) | The buyer |
| How much you recover | Up to 100% if collected | Amount minus commission | Discounted, but certain |
| Effort | High | Medium | Low |
In short: claiming can recover more but is slow, costly and uncertain. Collection shares the effort, but the risk stays yours. Selling gives you less than face value, but it is certain money, fast and risk-free.
Claim yourself
This is the route to recover 100%, but it takes time, money and nerve. Start with an out-of-court demand and, if that fails, court action scaled to the amount. Winning does not guarantee collecting: if the debtor is insolvent, the judgment does not turn into money. It makes sense when the debtor is clearly solvent and the debt is well documented.
Hire collection
A collection firm pursues payment for a commission, usually on success. It takes the work off you, but the risk stays yours: if they do not collect, you recover nothing (and sometimes bear costs). It fits when you do not want to manage it yourself but want to keep ownership of the debt.
Sell the debt
Selling means assigning the right to collect to an investor: you get less than face value, but it is certain money, fast and risk-free. You hand over the whole problem. It is the best option when you need liquidity now, when you doubt the debtor's solvency, or when you do not want to spend more time on it. As a reference, discounts of 35%-45% on face value are common.
When selling clearly wins
- You need immediate liquidity for the business.
- The debtor shows signs of insolvency or is hard to trace.
- The debt is old and nearing the limitation period.
- You do not want the cost or risk of claiming.
Use the calculator, then list to see real offers.
List my debtBrowse debts for saleIt is not all or nothing
You can combine routes: demand out of court and, if there is no response, sell; or sell part of your portfolio and claim the rest. What matters is not leaving the debt sitting and ageing, because every month it loses value.
The limitation clock
Whatever you decide, do it in good time. Every jurisdiction sets a limitation period after which a claim can no longer be enforced. A time-barred debt is practically unsellable and uncollectable, so the worst decision is usually not deciding.
A decision framework in four questions
If you are torn between collecting and selling, answer these four questions and the choice usually clears up:
- Is the debtor solvent? If clearly yes, claiming may recover more; if in doubt, selling removes the risk.
- Do you need the money now? If liquidity is urgent, selling wins on speed.
- Do you have good documentation? With solid proof both routes improve; without it, selling avoids an uncertain lawsuit.
- How much is your time worth? Claiming eats months; selling frees them.
The real (and hidden) cost of claiming
When comparing routes people often forget the full cost of claiming. On top of fees, lawyer and court, you must count the time (months or years), the uncertainty (winning is not collecting) and the opportunity cost of having that money idle instead of working for you. Add it all up and a selling discount that looks expensive at first can be cheaper than a collection that arrives late, with costs and no guarantees.
Signs it is time to sell
There are moments when the balance tips clearly toward selling. If the debtor has stopped responding, has moved without notice, is piling up defaults with other creditors, or their company shows signs of trouble, every month you wait subtracts value from your claim. It is also a sign to sell when the matter drains time and energy you need for your business. Recognising these signs in time avoids being left with a debt that deteriorates in your hands.
How to prepare the debt before deciding
Whether you collect or sell, prepare the file first: gather the contract or invoice, the demand communications, proof of the debt and any acknowledgement from the debtor. Check when the limitation period started running. An ordered file improves your position on both routes: if you claim, it strengthens your case; if you sell, it raises the price and speeds up offers. Preparation is never wasted, whichever path you choose.