A junk debt buyer is a collection agency which has purchased a portfolio of delinquent or charged off accounts from credit card companies, or other collection agencies. Credit card debt accounts for nearly 70% of the accounts sold to junk debt buyers, followed by auto loans, telecommunications debt and other retail accounts. Some of the better known junk debt buyers are Asset Acceptance, NCO Group, Portfolio Recovery Associates, RJM Acquisitions, Cavalry Portfolio, Unifund, Midland Funding, First Select, and Sherman Acquisitions.
Junk debt buyers purchase debts on which other debt collectors have failed. Usually, the debts are too old to be sued upon, or the debtor is judgment-proof, or the debtor cannot be located, or the debt has even been discharged in bankruptcy. Because the accounts are inherently hard to collect, junk debt buyers pay only pennies on the dollar for the debt.