How to Buy Credit Card Debt for Pennies on the Dollar

The recent credit crisis and series of bank failures has created a once in a lifetime opportunity for investors who know how to buy credit card debt and bad loans. The Government has been buying up banks with hundreds of billions of dollars of troubled assets. The assets of these banks will be sold to investors and other banks at a great discount. There are billions of dollars in bad loans that can be purchased from the FDIC and banks. Why not get your share of the profits to be made from the massive government bailout of the financial markets?

There are a lot of things to learn before you jump in and start buying distressed loans at a discount. Bankers receive a lot of calls from new and inexperienced investors every day trying to get great deals on distressed loans. You need to build a relationship with the right banker.

If you don’t already have money, you will need to raise money. It is important to have your cash ready to get the banks to give you the best price.

You should plan out a system for every part of the process. Compare the loan pools against each other and choose the best package for your risk level. Your efforts in analyzing and scoring the loans should allow you to estimate a recovery cost for your collection efforts. Some loans may not be collectable so you will need to estimate a loss percentage into your financial plan.

The FDIC also has a lot of information and frequently asked questions about buying loans, purchaser eligibility, and certification. Every interested investor should consider if loans are a suitable investment based on their own circumstances. Purchasers will need financial resources sufficient enough to bear the economic risk involved in a loan purchase. There is a lot to learn about buying bad loans. No loan package is the same and each must be given careful review and consideration. If it looks too good to be true, it probably is.

You will need to interview several collection companies and find one that has a good track record of collecting so you won’t have to make collection calls yourself. If you do not have any collection experience it is better to leave it to the professionals and factor that cost in before you purchase a loan.

There is a window of opportunity that will last several years and then, most likely, it will be over. In his book, Bailout Riches, Bill Bartmann, who created America’s largest debt buying and collection company in the 1990s and became a self-made billionaire, says “I’ve seen this movie before and I know how it ends: I make a Billion Dollars”.

Many more banks will be failing before the end of the year and record high foreclosures are expected to continue in the future. Several major banks have stopped foreclosure actions because a few employees cut corners and tried to rush the process. This delay along with the government response will disrupt normal market conditions and cause even more distress. This should make banks and the government more anxious to get the bad credit card debt off of the books of the failed banks so they can lend more freely again.

There are a lot of people and businesses that have been affected by the credit crisis. The real estate, construction, and mortgage industries are still in a state of confusion awaiting a recovery. This is the perfect time for people to learn how to buy credit card debt and make their fortunes.

Getting Unsecured Loans With Bad Credit Can Come Down to the Right Loan

It is generally believed that unsecured loans are practically impossible get approval on when the applicant has a bad credit history. But like so many commonly held beliefs, this is not actually accurate. The truth is that applying for unsecured loans with bad credit can end in approval, so long as some careful consideration is put into the process.

Often, those that have seen their application rejected are guilty of seeking a loan that they want rather than a realistic loan for their status. This is because unsecured loans with bad credit are approved only when the lender is convinced that repayments can be made without a hitch.

The problem is that people tend to seek loans that are too large. For such loans, approval with no security and bad credit is unlikely. Unsurprisingly, experts advise that people get a good grasp of their own situation before starting the application process.

What is the Right Loan

Of course, recognizing the right loan is a tricky thing. A handsome sum like $100,000 would make our financial troubles disappear, but lenders are naturally cautious when assessing even small unsecured loans with poor credit. It is understandable since the lender still wants to get their money back.

Therefore, the successful application for an unsecured loans will always be the one that takes a realistic approach to the deal. For example, the income is proven to be comfortably within the repayment requirements, the loan sum is not exorbitant and the term of the loan is longer to facilitate a lower monthly repayment.

Meanwhile, the risk of future financial woes, even if not related to the loan itself, dictates that a buffering sum from an income should remain, so there are at least a few hundred dollars in reserve to handle sudden expenses. This way, loan approval with no security and poor credit can be achieved.

Recruiting a Cosigner

If the credit history of the applicant is bad, then it is a good idea to get a cosigner on board. This essentially provides a guarantee that repayments will be made, so the risk associated with unsecured loans with poor credit is significantly reduced.

The role of a cosigner is to take responsibility for the unsecured loan if the borrower is unable to make repayments. This means that the lender can be confident that someone will pay up. Of course, the cosigner also needs to have a good credit rating, and prove their ability to make the repayments themselves.

Technically, the cosigner is providing security. So, even though there is no collateral, there is something that the borrower can offer to the lender. Therefore, the lender is not providing loan approval with no security and poor credit, but approval to a loan that is guaranteed.

Search for Lender and be Flexible

Sometimes, to secure the funds necessary requires some lateral thinking. For example, if $40,000 is needed, but your status makes getting that sum unlikely, then taking out four individual $10,000 unsecured loans with bad credit will raise $40,000.

These loans do not need to be taken out concurrently, but as one ends another can be taken up. This can mean a very structured management of existing debt, but also that credit ratings improve. So, by the fourth, loan approval with no security and bad credit is much easier.

Such flexibility is sometimes necessary but it is a good idea to search extensively for a lender first. Online lenders tend to offer the best deals with unsecured loans with bad credit a speciality for many lending firms there.