this post was submitted on 21 Aug 2024
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According to a Wall Street Journal report, banks that loaned Elon Musk $13 billion to buy Twitter haven't been able to sell the debt.

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[–] rem26_art@fedia.io 34 points 2 months ago (3 children)

the ability for institutions like that to sell debt has always been wild to me. Like, can i sell my debt? Please?

[–] Darkassassin07@lemmy.ca 39 points 2 months ago* (last edited 2 months ago) (1 children)

It's not money they owe, but money owed to them; backed by some form of contract. Your credit card contract for example.

Person A owes person B money, let's say $100. Person B sells that debt to Person C for $80.

Person A still owes the same $100, just to a different person.

Person B gets paid now instead of waiting for Person A to pay up, but lost $20 on the deal.

Person C invested $80, hopefully gets paid the full $100, not having to chase down a delinquent debtor, and profits $20 out of the deal.

Nobody wants to be person C when it comes to the Debt Twitter owes.

If you had someone that owed you money (or anything else really), you could sell that debt, assuming you can find a buyer for it. Banks just do this on a much larger scale than $100 at a time.

[–] cuerdo@lemmy.world 2 points 2 months ago* (last edited 2 months ago)

Another example are collection agencies:

  • Frenchie owes Artie $50,000, but he cannot collect.
  • Tony pays Artie $6,000 to buy the debt.
  • Then Tony visits Frenchie and he gets the $50,000 with a bit of gabagool

Free Cannoli

[–] bizarroland@fedia.io 22 points 2 months ago

Yes you can sell your debt as a consumer. People do it all of the time.

However, the terminology is different.

We call it "taking out a loan".

[–] then_three_more@lemmy.world 7 points 2 months ago

Say you have a credit card debit and you take out a new card because it has a free credit transfer offer going on. You're selling your debt right there.

Another scenario is you have a loan and refinance it using a new loan.