How Much Do Debt Buyers Pay for Portfolios?

Debt buyers pay an average of 4-8 cents on the dollar for charged-off debt portfolios, with fresh debt under 90 days commanding 8-12 cents and aged debt over 2 years selling for 2-5 cents, then attempt to collect the full face value plus interest—giving them profit margins of 200-2,500% when collection is successful. Understanding debt portfolio pricing helps consumers recognize why debt buyers aggressively pursue collection and why they are often willing to accept settlement offers for 40-60% of the balance. When creditors charge off debt after 180 days of non-payment, they sell portfolios to debt buyers who specialize in collecting old debt at steep discounts.

How the Debt Buying Industry Works in Canada

The debt buying industry operates on a simple business model: purchase charged-off debt for pennies on the dollar, then collect as much as possible to generate profit. Creditors charge off debt after 180-210 days of non-payment, meaning they write it off as a loss for accounting purposes but do not forgive it. Rather than continue internal collection efforts with diminishing returns, creditors sell portfolios containing hundreds or thousands of accounts to debt buyers for immediate cash.

Debt buyers purchase portfolios outright, meaning they own the debt and all legal rights to collect it. The original creditor no longer has any claim to the debt or involvement in collection. Debt buyers attempt to collect the full face value of each account plus any accumulated interest, creating substantial profit potential when successful.

A debt buyer who purchases a $10,000 account for $400 (4 cents on the dollar) and successfully collects $5,000 through settlement earns $4,600 profit, representing a 1,150% return on investment. Even if the buyer collects only $1,000, they still double their investment. This profit potential drives aggressive collection efforts.

Debt can be sold multiple times. If the first debt buyer fails to collect after 6-12 months, they may sell the debt to another buyer at an even steeper discount. Second and third-generation debt sales command prices as low as 1-2 cents on the dollar because collection probability decreases with each failed attempt.

Average Debt Portfolio Prices: What Buyers Pay

U.S. Federal Trade Commission analysis of approximately 3,400 debt portfolios found an average purchase price of 7.9 cents per dollar of face value. Canadian debt portfolio pricing follows similar patterns, with averages ranging from 4-8 cents on the dollar depending on portfolio quality. Industry sources report typical pricing of 4-6 cents for mixed-quality portfolios.

Fresh debt under 90 days old commands the highest prices at 8-12 cents per dollar because debtors are more likely to have income, assets, and willingness to pay. Accounts within the first year of delinquency typically sell for 6-10 cents. Aged debt beyond 2 years sells for 2-5 cents per dollar due to decreased collection probability.

Credit card debt portfolios generally command higher prices than medical debt, utility debt, or payday loan debt. Credit card accounts often have better documentation including signed applications and detailed transaction histories. Medical and utility debts frequently lack complete documentation and have lower recovery rates.

Large-balance accounts are more valuable per dollar than small-balance accounts. A portfolio containing accounts averaging $15,000 per account sells for higher percentage than a portfolio with $500 average balances because collection costs are similar regardless of balance size. Small accounts under $500 may not be economically viable to pursue through lawsuits.

Debt within the statute of limitations for the debtor’s province commands premium pricing because buyers retain the option to sue if collection efforts fail. Debt past the 2-6 year limitation period depending on province has minimal value because buyers cannot successfully sue even if they obtain judgments.

Factors That Affect Debt Portfolio Pricing

Six primary factors determine how much debt buyers pay for specific portfolios. Age of debt is the single most important pricing factor. Fresh debt under 90 days old represents recent delinquency with higher probability that debtors still have jobs and assets. Collection success rates decrease steadily as debt ages. Debt over 2 years old has been through multiple collection attempts and represents debtors who have proven resistant to collection pressure.

Debt type significantly affects pricing. Credit card debt commands 6-10 cents on the dollar for fresh accounts. Medical debt typically sells for 3-6 cents due to limited documentation and public sympathy for medical hardship. Utility debt and telecommunications debt sell at similar discounts. Payday loans may command higher prices despite small balances because borrowers often have bank accounts that can be seized after obtaining judgments.

Documentation quality directly impacts collection success and therefore pricing. Portfolios with complete original credit applications, signed agreements, detailed transaction histories, and statements documenting the debt command premium prices. Accounts with incomplete or missing documentation sell at steep discounts because debt buyers cannot prove the debt in court if debtors dispute it.

Debtor credit scores and payment histories affect pricing. Accounts belonging to debtors with higher credit scores generally have better recovery rates because those debtors are more likely to have income and assets. Payment history showing multiple years of on-time payments before default suggests temporary hardship rather than chronic non-payment. Accounts with poor payment history from inception suggest high-risk debtors unlikely to pay.

Number of previous sales dramatically impacts pricing. First-time debt sales from original creditors to debt buyers command 6-10 cents for quality accounts. Second-generation sales from one debt buyer to another typically fetch 2-4 cents. Third-generation and beyond may sell for 1 cent or less because multiple collection attempts have already failed.

Whether debt is within the statute of limitations for the debtor’s province affects pricing substantially. Ontario, Alberta, and BC have 2-year limitation periods. Quebec has 3 years. Manitoba and territories have 6 years. Debt past these limitation periods sells for minimal amounts because buyers cannot successfully sue.

Use the statute of limitations calculator to determine whether debt is still within the limitation period for your province.

What Rights Do Debt Buyers Have to Collect?

Debt buyers have identical collection rights as the original creditor once they purchase the debt outright. They can contact you by phone, mail, email, or text to request payment. They can report the debt to Equifax and TransUnion credit bureaus as a collection account. They can file lawsuits if the debt is within your province’s statute of limitations.

If debt buyers obtain judgments through successful lawsuits or default judgments when you fail to defend, they can pursue wage garnishment at 20-50% of your net wages depending on your province. They can seize funds from bank accounts through enforcement orders. They can register judgments against real property you own, creating liens that must be paid if you sell or refinance.

Provincial consumer protection legislation applies equally to debt buyers and original creditors. Debt buyers cannot contact you more than 3 times in 7 days in Ontario and Alberta. They cannot call outside permitted hours, typically Monday-Saturday 7am-9pm and Sunday 1pm-5pm in BC with similar rules in other provinces. They cannot call on statutory holidays in some provinces.

Debt buyers cannot threaten jail time for civil debt, which is illegal and false. They cannot use threatening, coercive, or intimidating language. They cannot discuss your debt with third parties without your permission except to contact the original creditor, guarantors, or your legal representatives. They cannot charge additional collection fees beyond the original debt in Ontario.

If debt buyers violate these rules, document every violation with date, time, collector name, buyer company name, and detailed notes. Report violations to your provincial consumer protection authority: Ontario Ministry of Public and Business Service Delivery, Consumer Protection BC, Service Alberta, or equivalent in your province. File complaints with the Financial Consumer Agency of Canada if the debt buyer is federally regulated.

How to Request Debt Validation from Debt Buyers

Debt validation is your legal right to require debt buyers to prove they own your debt and provide documentation supporting the amount claimed. Send a written debt validation request by registered mail or email with delivery confirmation within 30 days of first contact from the debt buyer, though you can request validation at any time.

Your validation request should ask for: proof of ownership of the debt such as a bill of sale, assignment agreement, or chain of title showing the debt was sold from the original creditor to the current buyer; the original creditor’s name, account number, and date the account was opened; the original amount borrowed, the current balance claimed, and an itemized breakdown showing principal, interest, and any fees; and copies of the original credit agreement or contract you signed with the original creditor.

Provincial consumer protection rules vary on validation timelines and requirements. In most provinces, debt buyers must respond within 30 days of receiving your validation request. During the validation period, debt buyers must pause collection activities including calls, letters, and credit reporting until they provide the requested documentation.

If the debt buyer cannot or will not provide complete validation, they must stop collection efforts on that account. Continued collection without validation violates provincial consumer protection laws. If a buyer provides incomplete validation, send a follow-up letter identifying specifically which documents are missing and requesting complete validation.

Debt validation helps you identify: debts you do not owe due to identity theft or creditor error; debts with incorrect balances where the buyer is claiming more than you owe; debts past the statute of limitations where buyers cannot successfully sue; and debts the buyer cannot prove they own due to incomplete documentation in portfolio sales.

Many debt buyers purchase portfolios with minimal documentation and cannot provide complete validation when challenged. If validation is incomplete or not provided, consider whether the debt is worth disputing in court if the buyer sues anyway.

Can Debt Buyers Negotiate Settlements?

Debt buyers frequently accept settlement offers for 40-60% of the claimed balance because they purchased the debt for only 4-8 cents on the dollar. A settlement at 50% of face value represents a 500-700% profit margin for buyers who paid typical portfolio prices. This creates substantial room for negotiation.

Settlement negotiations work best when you have immediate access to lump-sum cash. Debt buyers prefer lump-sum settlements over payment plans because lump sums eliminate risk of default and provide immediate return on investment. Offering $3,000 cash to settle a $10,000 debt may be accepted if the buyer paid $400-800 for the account.

Always get settlement agreements in writing before making payment. The written agreement must specify: the original creditor and account number; the settlement amount and payment due date; confirmation that payment satisfies the debt in full; and how the account will be reported to credit bureaus (ideally as paid in full rather than settled for less). Never send payment without signed written confirmation.

Paid-in-full status is preferable to settled-for-less status on credit reports, though both are better than ongoing collection accounts. Negotiate for paid-in-full reporting if possible. Some buyers will report paid-in-full if you settle at 60-70% of the balance rather than 40-50%.

Be aware that forgiven amounts over $600 may be reported to CRA as taxable income under certain circumstances, though this is less common in Canada than in the United States. Consult a tax professional if settling large balances.

Consumer Proposals vs Negotiating with Debt Buyers

Consumer proposals offer significant advantages over negotiating settlements with debt buyers individually. Proposals typically achieve debt reduction to 20-40% of total owed compared to 40-60% through individual settlements. A consumer proposal provides legal protection through a stay of proceedings that stops all collection calls, lawsuits, and wage garnishment immediately.

Consumer proposals include all unsecured debts simultaneously rather than requiring one-by-one negotiation with multiple debt buyers and creditors. If you owe $50,000 across five accounts owned by different debt buyers, a consumer proposal settles all five in one proceeding. Individual settlements require separate negotiations with each buyer, taking months and creating risk that some buyers will sue while you negotiate with others.

Consumer proposals report as R7 on credit files and are removed 3 years after completion or 6 years from filing, whichever comes first. Individual settlements report as R9 (settled for less than owed) and remain on credit reports for 6 years from settlement date. R7 ratings are less severe than R9 ratings, potentially resulting in faster credit score recovery.

Licensed Insolvency Trustees handle all creditor and debt buyer communication once you file a consumer proposal. You never speak to collectors again. The stay of proceedings prevents new collection attempts, lawsuits, or garnishment throughout your proposal term of up to 5 years.

In 2024, 78.6% of Canadians who filed insolvency chose consumer proposals over bankruptcy. Proposals allow you to keep all assets including homes, cars, and RRSPs while repaying a reduced amount in fixed monthly payments. Payments never increase even if your income rises during the proposal term.

Debt buyers must vote on consumer proposals like any other creditor. They typically accept proposals that offer more than they would receive in bankruptcy. Because debt buyers paid only 4-8 cents on the dollar for the accounts, they often vote to accept proposals offering 20-40 cents on the dollar, representing substantial profit over their acquisition cost.

Bottom Line: Debt Buyers Paid Pennies But Can Collect Dollars

Debt buyers purchase charged-off debt portfolios for 4-12 cents on the dollar depending on age, documentation quality, and statute of limitations status, then attempt to collect full face value plus interest for profit margins exceeding 1,000% when successful. Fresh debt under 90 days commands 8-12 cents per dollar while aged debt over 2 years sells for 2-5 cents. Debt buyers have the same collection rights as original creditors including suing within the statute of limitations and obtaining wage garnishment at 20-50% depending on province.

Consumers can request debt validation in writing requiring buyers to prove ownership and provide documentation, with buyers required to pause collection until validation is provided in most provinces. Debt buyers often accept settlements for 40-60% of claimed balances because this still represents substantial profit over acquisition costs. Consumer proposals provide superior debt resolution by settling all debts simultaneously for 20-40% with legal protection through a stay of proceedings that stops all collection activity immediately.

Debt past provincial statute of limitations periods of 2-6 years has minimal value to buyers because they cannot successfully sue. All provincial consumer protection laws apply to debt buyers equally, prohibiting harassment, excessive contact, and false threats. Filing a consumer proposal stops debt buyer lawsuits and collection permanently while allowing you to keep all assets.

Settle debt with buyers for 20-40 cents on the dollar through a consumer proposal—legal protection included. Free consultation.

Disclaimer: This article provides general information about debt buying and collection in Canada and should not be considered legal or financial advice. Find a Licensed Insolvency Trustee for advice specific to your situation. Always request debt validation before paying debt buyers.

Last updated: February 2, 2026