Debt exchange - check what it is
The debt exchange, also known as the debt exchange, is becoming more and more popular. In short, it is a register of economic information concerning claims with purchase offers.
How does the debt exchange work?
Offers to sell debts are entered in the records kept by entities dealing with the debt exchange. Thus, information on unpaid debts and entities that are debtors is made public. Due to the growing popularity of debt exchanges, the profile of debt brokerage services is developing.
When is the debt exchange helpful?
The debt exchange is used by creditors whose debtors are in arrears and delay settlement despite calls for payment. Instead of bothering with debt recovery from a dishonest entity, they decide to sell the debt. The debt exchange is also used by debt collection companies. Entrepreneurs who would like to verify their client may also be interested in the register of debtors - obtain information about the "black" payment history, allowing to check the credibility. Stock exchanges are also of interest to entities that are effective in debt repayment and can earn by buying debt listed on the debt exchange.
Debt exchange - can you sell your debt?
In practice, the entrepreneur usually does not want to waste time recovering unpaid receivables. One of the solutions in such a situation is the sale of debt - placing an offer on the debt exchange. The solution can work in two ways:
1) someone buys the debt and the creditor will recover at least part of the debt without undue delay;
2) as a "bogey" for the debtor, that is, a means of motivating to settle the obligation.
The mere listing of the debt on the debt exchange is already a certain motivation for the debtor to pay it off. It appears in the register with the name and surname / name of the company, city and the amount of debt that remains to be repaid.
Debt exchange and personal data protection
An important thing is the legal basis for announcing the debt on the debt exchange. First of all, attention should be paid to issues related to the protection of personal data. The provisions protecting personal data allow for their processing in situations where it is necessary to fulfill the legally justified purposes of data controllers - i.e., for example, a claim for payment by the creditor's company. Pursuing claims for business activity may be considered a legitimate goal. This means that the entrepreneur can provide information about the debt together with the basic data of the debtor (name and surname / name, city) in accordance with the law and without the need to obtain the debtor's consent.
What are the benefits of the debt exchange?
A debt exchange should benefit each of the parties involved. The benefit for the debtor issuing the debt may be faster recovery. On the other hand, the creditor who sells the debt gets paid quickly. Although it is usually smaller than the debt itself, it receives it without having to wait and spend on investigating it. The buyer of the debt, in turn, may gradually recover the entire debt repayment, and therefore, as a consequence, will obtain an amount of income higher than the cost of achieving it.
Debt exchanges are becoming an increasingly popular tool for collecting overdue debts and are certainly one of the tools used in the process of debt collection.