The question every creditor asks before selling: how much is my debt actually worth? The short answer is whatever an investor will pay. The long answer depends on five factors.
1. The debtor's solvency
This matters most. A debt against a trading company with assets is worth far more than one against a struck-off company or an insolvent individual. Buyers investigate the debtor before offering: active status on the MCA register, assets, charges and other proceedings.
2. The age of the debt
The more recent, the better. Debts under a year old sell at smaller discounts; after 3 years the discount grows sharply, partly because of limitation. Under the Limitation Act, 1963, a suit for recovery of money is generally time-barred 3 years after the cause of action (or the last written acknowledgement or part payment).
3. The available documentation
Signed invoices, delivery challans, contracts and a written acknowledgement of debt multiply the value. A debt with no paperwork has almost no market.
4. Whether there is a decree or order
A debt backed by a civil decree, a DRT recovery certificate or a dishonoured-cheque conviction removes the legal risk, leaving only collection risk, and commands a better price. Some buyers instead prefer debts without proceedings so they can litigate on their own terms.
5. The total amount
Very small debts attract less interest because fixed recovery costs weigh heavily, while very large ones shrink the buyer pool. Portfolios let small ₹ amounts be grouped and made attractive.
What discount should I apply?
As a guide: recent, documented debts against a solvent debtor, discounts of 20-40%; medium-risk debts, 40-70%; old or hard-to-collect debts, discounts above 70% or "open to offers".
We always suggest listing with a minimum 20% discount and marking the price negotiable: the market quickly tells you whether your expectation is realistic. You can verify a company's status on the Ministry of Corporate Affairs portal.
The cost of not selling
Always weigh the alternative: years of litigation, tribunal and court fees, lawyers, and the real chance of collecting nothing if the debtor becomes insolvent. A reasonable discount today is usually better than an uncertain claim tomorrow. Debtalia connects you directly with buyers, anonymously and with no commission.
