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 is the single most important factor. A debt against an operating company with assets is worth far more than one against a dissolved LLC or an insolvent individual. Buyers investigate the debtor before making an offer: business status, real estate, liens, other judgments and bankruptcy filings.
2. The age of the debt
Fresher is better. Accounts under a year old sell at smaller discounts; after 3 to 4 years the discount grows sharply. Watch the statute of limitations, which varies by state (commonly 3 to 6 years for written contracts) — a time-barred debt is worth almost nothing.
3. The documentation available
Signed invoices, contracts, promissory notes or a written acknowledgment of debt multiply the value. A debt with no paperwork has practically no market.
4. Whether there is a judgment
A debt with a court judgment removes the legal risk (only collection risk remains) and commands a better price — even more so if a judgment lien is recorded against the debtor's property. Some investors, however, prefer pre-judgment debts they can litigate themselves.
5. The total amount
Very small debts draw less interest because fixed recovery costs weigh too heavily, and very large ones shrink the pool of buyers. Portfolios let small accounts be bundled and made attractive together.
What discount should you apply?
As a guide: fresh, documented debts against a solvent debtor sell at discounts of 20-40%; medium-risk debts at 40-70%; old or hard-to-collect debts above 70%, or listed "open to offers."
On Debtalia we recommend listing with a minimum 20% discount and marking the price negotiable — the market quickly tells you whether your expectation is realistic. Debtalia is a marketplace that connects you with buyers directly, with no commission on the sale.
The cost of not selling
When valuing your debt, compare it with the alternative: years of litigation, court fees, attorney costs, and the real chance of collecting nothing if the debtor goes bankrupt. Court fee schedules are published at uscourts.gov. A reasonable discount today usually beats an uncertain claim tomorrow.
