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What Is a Debt Brokerage?

Sarah Edwards | November 03, 2022

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Debt brokers are like ^^

Summary: A debt broker is a middleman between creditors and collection agencies. They examine the details of overdue debts, including the consumer’s personal information. Using the details they obtain, the debt brokerage recommends collection agencies that are most suitable to collect a debt from the consumer. You can use SoloSuit to fight off debt collectors in and out of court.

If you’ve ever received a bill from an unfamiliar collections agency, you may wonder how they came to purchase your debt. After all, companies won’t just hand over your account information to anyone; they follow a specific process to maximize the chances of collection.

When a consumer shows signs of financial distress, like not paying their bills on time or refusing to pay them all together, creditors get nervous. They know there is a significant chance that the consumer won’t resume their payments, and they may be left holding the bag.

Rather than lose rights to the obligation, creditors sometimes seek help from a debt brokerage. A debt brokerage matches the creditor's needs with the appropriate collection agency most likely to succeed in collecting consumer debt.

How does a debt brokerage help?

A debt broker acts as a middleman between creditors and collection agencies. They examine the details of overdue debts, including the consumer’s personal information. Using the details they obtain, the debt brokerage recommends collection agencies that are most suitable to collect a debt from the consumer.

The debt brokerage will ensure that the collection agency has a valid debt collection license in the consumer’s state. Debt brokers will also examine the success rates of the debt collector and ensure they specialize in the specific types of debt the creditor is seeking to collect.

Let’s consider an example.

Example: A credit card lender has a customer in Florida who stopped paying their bills several months ago. The lender reaches our to a debt broker who will seek out a collection agency licensed in Florida that specializes in credit card collections. When selecting an appropriate firm, the debt brokerage will look at success rates and ensure that the agency has the right to sue the individual in their jurisdiction.Essentially, the debt broker acts as an advisor to the creditor, allowing them to select a collection agency with the highest chances of recouping the obligation.


Consider the example of a credit card lender who has a customer in Florida who stopped paying their bills several months ago. The debt brokerage will seek out a collection agency licensed in Florida that specializes in credit card collections.

When selecting an appropriate firm, the debt brokerage will look at success rates and ensure that the agency has the right to sue the individual in their jurisdiction.

Essentially, the debt broker acts as an advisor to the creditor, allowing them to select a collection agency with the highest chances of recouping the obligation.

Who pays the debt brokerage for their services?

Usually, creditors don’t pay the debt brokerage anything for their recommendations unless the collection is successful. The debt brokerage only receives payment if the recommended collection agency recoups all or part of the outstanding debt.

Debt brokers never purchase overdue debts. They act only as advisors, proposing appropriate collection agencies to a creditor. Once they’ve finished helping one creditor, they move on to the next.

If the collection agency they recommend is successful in their collection efforts, the creditor will pay the debt brokerage a certain percentage for their services. Their fees may range up to 2% of the debt’s value.

Do all creditors work with debt brokerages?

No. Some creditors have long-standing relationships with collection agencies they use to collect debts. Others prefer to select debt collectors on their own.

However, a debt brokerage can help creditors unfamiliar with the debt collection process and who want to maximize their chances of collecting an old obligation.

Can a debt brokerage sue me?

Debt brokerages do not purchase debts, and creditors do not assign them old consumer obligations. A debt brokerage acts only in the capacity of an advisor. They do not seek to collect debts from consumers.

Since a debt brokerage never owns consumer debts, they cannot pursue collections activity against an individual. The right to collections may pass to the debt collection agency if it purchases the consumer’s debt from the creditor.

What happens after a creditor selects a collection agency from the recommendations of a debt brokerage?

Once a creditor selects a collection agency to chase after an old debt, they’ll either pay for the agency’s services or allow the debt collector to purchase the obligation.

If the creditor pays the collection agency to help obtain the money from the consumer, the creditor retains ownership of the debt. The collection agency acts in the creditor’s interest, seeking to recover the money owed from the consumer.

The collection agency can send letters and call the consumer, but they cannot sue the debtor since they don’t own the debt.

If the debt collector pays for the consumer’s account, the collection agency will own the debt. The collection agency can pursue different tactics to collect the debt, including calling the consumer, sending them letters, and suing them in court.

Collection agencies hired to collect debts on behalf of the original creditor will retain a percentage of any amount they collect, according to the terms of the agreement.

If a collection agency purchases the debt from a creditor, it will profit from any money it recoups from the consumer. The creditor does not receive any money from the debt collector’s efforts other than the amount they received when the debt collector initially purchased the debt.

Respond to a debt collection lawsuit

If you’ve been sued for a debt, you need to respond to the lawsuit within your state’s deadline. It doesn't matter if it's valid or not; if you do not respond, you risk losing money anyway through a default judgment.

Follow these three steps to respond to a debt lawsuit against a debt collection agency:

  1. Respond to each claim in the Complaint. You can either admit, deny, or deny due to lack of knowledge. Most attorneys recommend that you deny as many claims as possible. Even if you owe them, do not admit the alleged debt. Instead, ask them to provide enough evidence that you are the legal debtor.
  2. Assert your affirmative defenses. An affirmative defense is any legal reason that PFW should not win the case. For example, the statute of limitations is a common affirmative defense to include in an Answer. There are dozens of other defenses you can use to strengthen your side of the case.
  3. File the Answer with the court, and send a copy to the opposing lawyer. Ensure you file an answer through your local Clerk of the court within the stipulated time frame; missing the deadline warrants a default judgment. Send your court-stamped response to the lawyer representing the creditor or debt collection agency.

Use SoloSuit to respond to a debt collection lawsuit in 15 minutes.

Learn more about these three steps in this video:

What is Solo?

Solo makes it easy to resolve debt with debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt. SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

SoloSettle can help you contact your debt collector or creditor and negotiate the debt to settle for less, all online. It simplifies and streamlines the process to settling your debt.

No matter where you find yourself in the debt collection process, Solo is here to help you resolve your debt.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

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