International debt collection agency Global Credit Solutions with American investment company Razor Capital has started a joint project to purchase consumer debts.
Debt purchase is a new business area in Ukraine and this raises a new challenges and questions on many issues in the Ukrainian business field. Initially the idea of debt transactions appears like a simple and fast way of obtaining funds for troubled assets However, there are some unique features specific to Ukraine. This short article will provide a brief overview on how to purchase debts in Ukraine.
1. First of all, it is necessary to identify which kind of debt you wish to sell , commercial or consumer debt; single debt or portfolio of receivables, secured or unsecured debt. It is especially important, because neither Ukrainian debt collection agencies, no international agencies purchase single corporate or private debts. The reason why is a high risk und unusually hard to predict the success of the recovery. By bundling debt together companies can aggregate the risk to make it more manageable. Only in the special cases it is possible to sell individual debt, for example, if the company-creditor is on the stage of liquidation and is ready to sell its troubles assets swiftly and inexpensive or the debt is secured.
2. Price. Even the most prospective consumer portfolio of receivables will have difficulty getting more than 10% from the listed portfolio value. Single unsecured corporate debt costs even less sometimes going as low as 5% secured debts generally receive a much higher price but are rarely offered for sale. Therefore, the main potential debt purchase clients are banks, insurance, leasing and telecommunications companies. For the owners of single corporate and private debts the best decision is debt collection service.
Global Credit Solutions Ukraine