Lessons Learned in Debt Purchasing

Share Post

Always Be Learning

It may be easy for my colleagues to think that since our receivables management industry focuses largely on debt buying, a webinar on lessons learned would simply be typical, common day-to-day information; however, I found this Receivables Management Association International webinar highly informative, nuanced, and helpful. In fact, Willey and Dreifuerst (the webinar presenters) both acknowledged that even they, as industry veterans, are still learning. 

The main focus of this information-packed one-hour webinar is secondary debt buying for small and medium debt buyers including the process of transacting, the vetting process, the fundamentals, what to be aware of during a purchase and sale, common challenges and misconceptions, and what the future looks like. Since buying different asset classes involves different procedure sets, the presenters made frequent allusions to the certification standards for each asset class, which I’ve included in this table for reference as a way to ensure that purchasing a debt is done within these certification standards and requirements.

Buying and Selling Best Practices

As debt buyers, it is our job to perform all the due diligence required prior to buying any debt. All aspects of the table above include aspects of due diligence, vetting, and finding out all crucial parts of the transaction. 

One way of performing due diligence is ensuring open communication with the seller. Both presenters emphasized that direct buyer and seller communication is crucial in brokering an open transaction. This communication is the best way to get questions answered and ensure that the debt you’re buying is above board, properly documented, and all aspects of the purchase agreement are considered. Communication helps buyers get an overview of the offering and the seller’s expectations; it helps buyers decide if the product type and the seller’s requirements fit within your strategies.

Buyers will want to ensure that all documentation is part of the deal: the NDA, any certifications/licenses, the data security, any needed financials, errors and omissions, and all compliance tracking. Especially in today’s regulatory climate, it is crucial for buyers to audit sample documents in accounts from the data file, review data files for completeness, and negotiate Purchase Agreement terms, including post-sale support provisions.

Best practices for buying and selling all start with constructing the proper purchase agreement with the client. Additional standards can include Better Business Bureau reports, Dun numbers, and Consumer Financial Protection Bureau portal and information. Checking for all oversight on accounts is also a crucial step in all aspects of debt buying and selling. It is especially relevant, for instance, in any judgment file, to validate all debits and credits.

Future Directions

There is a large trend in the industry toward online transactions and lenders. Checking your state’s policies on e-signatures and internet transactions is crucial prior to undertaking buying or selling of this asset class. There are additional trends towards seeing other alternative asset classes (apartment leases, debt settlement, etc.) and as a result, our industry needs to pay extra attention to leveraging technology, watching for CFPB proposed rule changes, and, perhaps more so for new asset classes but crucial for all, always demanding all relevant documents for your transactions. 

In Summary

Both Dreifuerst and Willey emphasized throughout the presentation, largely from their own errors during their careers, that documents can never be validated enough; there can never be enough questions asked; and, due diligence is almost never over. All transactions must be thoroughly vetted whether you are the buyer or the seller. Luckily, we at Tag Process are compliance professionals, and our focus on quality and developing strong relationships with our clients instills trust and proves that we are an excellent candidate for ensuring receivables management compliance and documentation, due diligence in our transactions, and the needed information and assurance to ensure smooth, problem-free transactions. 

Disclaimer 

This information is not legal advice and may not be used as legal advice. The information discussed or contained is not an explanation of the law and is presented for educational purposes only.  

 

Share Post

You May Also Like…

– Eric Logvin
Law Office of James R. Vaughan, P.C.

“Dave and TAG Process Service have been the primary process server vendor at our collection law firm for 10+ years. At Dave's leadership, TAG has essentially solved every issue we've thrown at them. This includes security, compliance, programming, reporting, APIs, and of course... getting the serves completed. Dave is honest, efficient, hardworking, and goes out of his way to solve problems. That mentality has been infused into TAG's staff by Dave, and it shows. I highly recommend Dave as an positive, experienced entrepreneur and also have the highest recommendation for TAG Process Service as a vendor for your law firm.”

See more recommendations

– Harvey Moore
The Moore Law Group

“Dave and his team provide us with competent process service. Although we have only been working with his company for approximately two years, he has met all of our requirements including security and reporting. He is open to new ideas and processes.”

See more recommendations

– Mark Kirkorsky
Mark A. Kirkorsky, PC

“Dave and Tag have proven to be a tremendous resource for our law firm. They are complete professionals and go out of their way to accommodate us. We know that we can always count on Dave and his staff to get the job done. We have worked with a number of process service companies over the years, but there is none better than TAG! They have our highest recommendation.”

See more recommendations

– Ruth Crosby
Hammerman & Hultgren, PC

“We have been using Dave and his team at Tag for a few years now. They have been great to work with. I love that we an import our documents and information. we have saved a forest in paper by now. Dave, Keep up the good work.”

See more recommendations

– Joseph Pezzuto II
Square Two Financial Corp.

“I have known Dave Rolf and his company Tag Process Service since 2010. He and his company have an excellent reputation as being Arizona's premiere process service provider. I have had several former employees work for Dave and they have always commented to me that his business is really well run as he is very committed to his staff and customers while providing superb work. I would recommend Dave and his staff to anyone who wants a company that provides "small-town" customer service and response time while implementing all the latest technology, compliance and supply-chain processes that larger companies utilize to ensure excellent client satisfaction and top service results.”

See more recommendations

– William Kelhoffer
Blatt, Hasenmiller, Leibsker, & Moore, LLC

“I've worked with Dave for several years. He has all the qualities you're looking for in a person to do business with. He is honest, hardworking, and will do everything in his power to meet and exceed your expectations. Dave and his team's customer service, integrity, and reputation are second to none.”

See more recommendations

– Bill Kastin
Snell & Wilmer, LLP

“Dave Rolf and Tag are phenomenal at everything that they do. Tag is an excellently run organization and its due almost entirely to Dave's leadership and management style. The organization is flexible, accommodating and able to handle its client's needs without much fuss or red tape. I wish more companies were run like Tag and continue to be thoroughly impressed with Dave.”

See more recommendations

Copyright ©2020 - Tag Process Service, Inc. - All rights reserved