Debt Purchase Company to Buy Old Debt
Many debt buyers are offering a free service. The company will buy old credit card accounts and resell them to consumers. The downside is that all of the information about the debt is lost. Also, if the company contacts you to collect on your account, it must send you a written notice. This notice must include the amount owed, the name of the creditor, and the action you need to take. The letter is valid for three years.
To protect the owners of the company, you’ll need to incorporate. The most common form of entity for this purpose is a Limited Liability Company. This is the easiest type of company to form and is the best way to get started. However, if you plan to invest a large amount of money, you should consider setting up a C Corp. This type of company is ideal for debt buyers that are more established or want to spend more money on marketing. Regardless of your needs, an accountant can help you choose the right type of entity.
Before you start buying debt purchasing companies, you should incorporate. This is for the safety of both the owners and the company. In the debt buying industry, the most common type of entity is a Limited Liability Company, which is the easiest to incorporate. However, there are other types of entities you should consider. An S Corp is a good choice if you have a fixed monthly budget. A C Corporation is best for large purchases and more expensive marketing campaigns. Consult your accountant to choose the most appropriate entity type for your needs.
How to Form a Debt Purchase Company to Buy Old Debt
Debt buyers typically receive a basic account file with the owner’s contact information. In most cases, account statements are excluded. When the debt buyer makes a purchase, it will be paid off right away. As the owner of the debt, you can’t lose any money if the company does not pay off your debt. And because it’s a sale, the risk of error is greater. If you are concerned about the risks of reselling your old debt, seek legal advice from a licensed professional.
The next step after filing for an entity is choosing a name for the business. Whether you choose to use a C Corp or an S Corp, the decision depends on the type of business you’re running. Keeping your legal identity protected is essential. Once you’re set up, you should consult your accountant. If you don’t know what entity type you need, ask them for advice. Then, you’ll be well on your way to incorporating.
When choosing a debt buyer, be sure to check out their terms. It’s important to read the contract carefully, as you may be signing a contract with a debt buyer who has more leverage than you realize. Although the debt buyer pays pennies on the dollar, the company could still make a profit if you pay only a portion of the total amount. Then, you can negotiate to have the rest of the balance forgiven.