The acquisition and collection of charged off credit card debt is a big business. In a recent post we spoke about how the smart money was loading up on credit card charge-offs. During 2009, the ten largest debt buyers alone purchased almost $50 billion face value of charged off credit card debt directly from banks.
In order to buy such large quantities debt buyers need access to capital. The major companies not only purchase very large quantities of charged off credit card debt directly from major banks, but they are financed by lending syndicates headed by these major banks:
- JP Morgan Chase administers a $100 million revolving credit facility and a $150 million term loan for Asset Acceptance Capital Corp
- JP Morgan Chase also administers a $327.5 million revolving credit facility for Encore Capital Group
- Portfolio Recovery Associates has a $365 million revolving credit facility from a group of banks including Bank of America, Wachovia Bank, RBC Centura, SunTrust and JP Morgan Chase
- NCO Group has a $569 million term loan and $100 million revolving loan administered by Morgan Stanley. Source: National Consumer Law Center