In Canada it is becoming more common for creditors to sell tens of thousands of unpaid accounts. This practice is known as "debt buying".
There are two categories of debt buyers:
Pure debt buyer: A pure debt buyer is a company that buys debts that were originally owing to some other creditor. A pure debt buyer might try to collect an unpaid account using its own in-house collection department. A pure debt buyer might also choose to assign an unpaid purchased debt to a collection agency for collection on a contingency basis. Finally, a pure debt buyer might also decide to sue a consumer in connection with an unpaid purchased account.
Collection agency: It is also possible for collection agencies to purchase debt. The primary revenue stream for collection agencies is collecting accounts on behalf of others on a contingency basis.
Some collection agencies--as a second revenue stream--may purchase debt and collect these unpaid accounts.
The crucial difference between a debt buyer and a collection agency is that a debt buyer will never collect accounts on behalf of others on a contingency basis.
It is common for debt buyers to purchase debt that has been delinquent for several years--and in many instances--the relevant provincial limitation period has expired. This provides the consumer with some opportunities. Firstly, the consumer might choose not to pay an outstanding account where the limitation period has expired. Secondly, the consumer might use the expiry of a limitation period as leverage negotiating a favourable settlement with a creditor.
In this YouTube video, Mark Silverthorn, Founder of Comprehensive Debt Solutions, explains the difference between a pure debt buyer and collection agencies, the latter which will sometimes buy debts.
Bebt buyers often purchase debt where the relevant limitation period has expired