What Is A Debt Broker?
I am not a lawyer, I am a debt and judgment referral expert (Collection Broker). This article is my opinion, based on my experience in California, and laws vary in each state. If you ever need legal advice or a strategy to use, please contact a lawyer.
A collection broker (also called a debt broker) helps people that own debts or judgments to quickly find the best pure-contingency collection agencies, so that creditors can have the best chance of getting paid.
There are millions of debts and judgments, and many hundreds of collection agencies, so why would a collection broker be needed? One reason is because a collection broker knows the right collection agencies in every state, and only refers creditors to the best.
Another reason a collection broker is needed is because debts and judgments are not worth a fixed amount like gold or money. A judgment or debt’s value depends on the debtor and their assets, laws, the economy, and the abilities and location of the collection agency. A collection broker knows the right collection agency for every judgment and debt situation.
One more reason is because collection brokers are reliable and work with volume, and have negotiated discounts for all creditors. Most debts and judgments are never collected because laws tend to make it difficult to collect from debtors. A collection broker helps to improve those odds, and makes sure the collection agency is licensed in the same state as the debtor’s assets.
What does a debt broker do? They answer questions from creditors, and research debtors using public data records, noting all the factors that determine which company is best suited to collect the debt or judgment. Then, they refer the creditor to the best agency. A debt broker (and anyone else) should only be paid if the creditor is repaid.
The debt broker is only paid when the creditor is repaid, so they have the right incentive to pick the best-suited agency to maximize the chances for more successful recoveries for every possible judgment and debt.
A debt broker maintains databases of quality agencies close to the debtors and their assets. For each debt or judgment, the debt broker contacts collection agencies close to the debtor’s assets, sometimes discussing the judgment or debt with several agencies. This is done, usually in one day, with no hassle for the creditors.
Only after a match of the right collection agency for a particular judgment or debt has been made, the collection broker contacts the creditor. After the collection broker introduces the creditor to a collection agency, the collection broker steps out of the picture. The debt broker then moves on, to help the next creditor.
Note that a debt broker never owns debts or judgments, and agencies do not require judgments or debts to be assigned to them, because they work on behalf of the creditors.
A debt broker cannot guarantee the performance of any collection agency they recommend, because nobody can predict the future.
Using a debt broker usually costs the creditor either nothing, or at most two percent of what is collected. In return for discounting their rates for the creditors, the agencies get pre-screened judgments and debts.
A debt broker performs an important role in helping both agencies and creditors increase their chances of getting repaid.