For businesses with large volumes of written-off or uncollectable accounts, debt sale — selling those accounts to a third-party buyer for a lump sum — is an alternative to ongoing collection efforts or permanent write-off. The Australian debt purchase market is mature, dominated by a relatively small number of licensed buyers, and operates within a regulatory framework that imposes obligations on both sellers and buyers.
How debt purchase works
A debt seller packages a portfolio of accounts — typically similar in type, age, and origin — and offers it to one or more debt buyers. The buyer conducts due diligence on the portfolio, assesses the likely recovery rate, and makes an offer expressed as a percentage of face value. The seller accepts or negotiates. On completion, the accounts are assigned to the buyer, who becomes the new creditor and is responsible for all further collection activity.
Who buys debt in Australia
The major debt buyers in Australia are Credit Corp Group, Collection House (now operating under the Panthera Finance umbrella after recapitalisation), and a number of smaller specialist buyers focused on specific asset types. Credit Corp is the largest, with the deepest balance sheet and the broadest appetite across consumer and commercial portfolios. Specialist buyers in sectors such as commercial trade debt, telecommunications, and utilities exist but are fewer in number than in the US or UK markets.
What portfolios sell and at what prices
Portfolio pricing depends on:
- Age: fresh accounts (under 12 months overdue) attract significantly higher prices than aged accounts (over 24 months).
- Quality: accounts with valid contact information, signed credit agreements, and clear documentation of the debt command premiums.
- Type: consumer debt (credit cards, personal loans, utilities) is more liquid and attracts more buyers than commercial trade debt.
- Size: large portfolios (above $5 million face value) attract more competitive processes; small portfolios may only attract one or two buyers.
Rough indicative pricing for consumer debt: fresh accounts may sell at 5–15 cents in the dollar; 12–24 month aged accounts at 2–8 cents; 24+ month accounts at less than 3 cents. Commercial debt typically sells at lower rates, reflecting lower average recovery rates. These ranges are broad — specific portfolio characteristics drive significant variation.
Regulatory obligations on sellers
A seller of consumer debt has obligations under the National Consumer Credit Protection Act 2009 (Cth) and the Privacy Act 1988 (Cth). The sale of debt is a disclosure of personal information and must comply with Australian Privacy Principles. The buyer must be an authorised deposit-taking institution or hold an Australian credit licence if the sold accounts include regulated credit contracts.
Is debt sale right for you
Debt sale makes sense when the cost of continued collection exceeds the expected recovery on the portfolio, or when the business has decided to fully exit from the activity associated with a particular set of accounts. It is not always the highest-value option — intensive collection by a specialist agency may produce more over time. The comparison depends on the age and quality of the portfolio.
Speak to Merion about whether collection, placement, or debt sale is the right approach for your specific portfolio.