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CollectionsA debt buyer's bid is cash today, and placement is more cash later. Here's how buyers price charged-off accounts, what regulators expect before a sale, and the present-value math to compare the two.
Compare the bid with what placement would net after fees, other costs and the wait for cash. Prices depend on account age, debt type and collection history. The most recent public price data, an FTC study published in January 2013, found buyers paid an average 4.0 cents per dollar of face value for portfolios bought from 2006 to 2009.
Buyers bid on what they expect to collect. Whatever makes accounts harder to collect pushes the bid down: age, debt type, earlier collection attempts and missing records.
The FTC's study, a government report published in January 2013, shows the pattern. It covers about 3,400 portfolios that 6 debt buyers bought between July 2006 and June 2009.
| Account profile, portfolios bought July 2006 to June 2009 | Price per dollar of face value |
|---|---|
| Average across the FTC's regression sample | 4.0 cents |
| Average across all portfolios submitted to the FTC | 4.5 cents |
| Baseline: credit card debt under 3 years old, bought from the original creditor, face value under $1,000, never sent to a contingency collector | 7.9 cents |
| Debt 3 to 6 years old | 3.1 cents |
| Debt 6 to 15 years old | 2.2 cents |
| Debt older than 15 years | Virtually zero |
| Previously sent to a contingency collector | 1.4 cents less than the baseline |
| Medical debt | 3.0 cents less than credit card debt |
| Utility debt | 3.6 cents less than credit card debt |
These prices are 17 to 20 years old, and we found no newer public series of prices per dollar of face value. Use the table for the shape of the curve, and get current bids for today's level.
| Item | Sell the accounts | Keep placing them |
|---|---|---|
| Cash | One payment at closing | Arrives as the agency collects, over months |
| Amount | The bid, fixed at sale | Collections minus fees and other costs, which vary |
| Ownership | Passes to the buyer | Stays with you |
| Who contacts account holders | The buyer, or collectors it hires | Agencies you choose and oversee |
| Later payments | Go to the buyer | Come to you, less fees |
| Your costs | Preparing files and records; negotiating the sale agreement | Overseeing agencies: audits, complaints and reconciliation |
| Price signal | Current bids (the FTC's 2006-2009 average was 4.0 cents) | Your own liquidation history by placement stage |
The FTC's 2013 report laid out both sides. Placement gives creditors more control over how collectors treat consumers, which matters to creditors wary of reputational harm, and steady work with agencies may return more than a sale would. Creditors may sell to avoid the cost of coordinating and monitoring collectors, or to take a fixed amount now in place of a delayed, uncertain one.
Many creditors do both. The FTC reported that creditors who sell charged-off debt often place it with agencies first, and it gave an example of selling a share at each stage: 25% right after charge-off, 25% after the primary agency and the rest after the secondary agency.
Published contingency ranges for placement are on what collection agencies charge, and what you net after fees.
Compare both options at present value, meaning what the future cash is worth now.
Placement net = face value × expected liquidation × (1 − contingency fee) − other placement costs. To discount it for the wait, divide by (1 + your annual rate) raised to the power of (months until the cash arrives ÷ 12).
Sale net = face value × bid − the cost of preparing and closing the sale.
| Input | Example |
|---|---|
| Face value placed or offered | $5,000,000 |
| Expected liquidation if placed | 6% |
| Contingency fee | 30% |
| Other placement costs you pay | $20,000 |
| Average months until placement cash arrives | 12 |
| Your annual discount rate | 8% |
| Bid | 3.50 cents per dollar |
| Cost to prepare and close the sale | $15,000 |
With these inputs, placement nets $190,000, or $175,926 at present value. The sale nets $160,000, so placing comes out $15,926 ahead (TSI calculation). With the other inputs unchanged, selling would net more only if the bid topped 3.82 cents or expected liquidation fell below 5.51%.
Results vary by portfolio, including account age, balance and type, and by client program.
Liquidation is the input to test hardest. Base it on your own history for the same kind of accounts at the same stage.
If you're a national bank or federal savings association, OCC Bulletin 2014-37 (Aug 4, 2014) sets the OCC's expectations for consumer debt sales. It lists debt "clearly not appropriate for sale," including debt that's settled or being settled, debt of deceased account holders, debt of borrowers in bankruptcy, debt in litigation with the bank, debt from fraud and accounts lacking clear evidence of ownership.
It also tells banks to refrain from selling accounts eligible for Servicemembers Civil Relief Act protections, accounts of minors, accounts in disaster areas and accounts close to the statute of limitations. And it lists the records banks should give buyers for each account.
Where the rule stands
Other creditors should check what their own regulators and contracts require. For oversight of collection vendors more broadly, see what changes for vendor oversight under the proposed third-party guidance.
A spot sale moves one portfolio once. Under a forward-flow contract, accounts with set attributes are sold at regular intervals, usually monthly, at a unit price agreed at the start (FTC, 2013).
Each side takes the risk that spot prices move against it after the price is locked. The contracts the FTC reviewed usually let either party stop for cause, such as a failure to perform, though market moves alone generally don't count.
Whether a collection fee can be passed on to the account holder depends on the agreement that created the debt and on the law that applies, and state laws differ. For consumer debts, the FDCPA bars a debt collector from collecting any amount, including a fee, unless the agreement creating the debt expressly authorizes it or the law permits it (15 U.S.C. 1692f(1)). What an agency charges you is a separate question from what the account holder can be asked to pay.
Prices come from the FTC's January 2013 report, the most recent public source of prices per dollar of face value we found; the portfolios were bought from 2006 to 2009. The OCC guidance and its status were checked on the OCC's site on Sep 28, 2026. The worked example is TSI arithmetic on the inputs shown. Every figure gets checked again by Mar 28, 2027.
TSI earns contingency fees when creditors place accounts with it, so it has a stake in this question.
TSI (Transworld Systems Inc.) publishes it. TSI provides Accounts Receivable Management (ARM), Healthcare Revenue Cycle Management (RCM), CXBPO and Loan Servicing (via UAS). DebtNext, a TSI company, makes recovery management software for creditors. Some options this page describes compete with services TSI sells. Each figure names its publisher and date so you can check it yourself.
The sell-or-place calculator puts a bid and a placement forecast side by side at present value and shows the break-even bid. Open the sell-or-place calculator. It runs in your browser, and nothing you enter is stored or sent.
General information, current as of Nov 5, 2026. It isn't legal advice. Rules change and differ by state, so check the sources linked here and talk to your own counsel before you act on it.
The Recovery Performance Diagnostic sets baseline economics for one portfolio, stage or segment, along with channel strategy, complaint and risk analysis, and carve-out design, and it converts to a measured pilot.
