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1.4.7.4 Chain of Title

In addition to original creditors selling debts, debt buyers may also choose to sell debts to other debt buyers. Debt that is sold multiple times may result in ambiguities as to which debt buyer owns the debt, making it difficult to establish an unbroken chain of ownership stretching from the original creditor. There can even be disputes as to who has proper title to a portfolio of debt.316

As discussed in § 1.4.7.3, supra, the increased separation between the entity suing on a debt and the original creditor means that the debt buyer plaintiff will also have difficulty obtaining documentation proving the underlying debt.

Although the CFPB found that credit card issuers were generally prohibiting the resale of credit card debt in mid-2015,317 there is no indication of sellers of other types of debts adopting similar prohibitions.

Footnotes

  • 316 See Jake Halpern, Inside the Dark, Lucrative World of Consumer Debt Collection, N.Y. Times Magazine (Aug. 14, 2014) (describing a portfolio that was sold twice).

  • 317 Consumer Fin. Protection Bur., The Consumer Credit Card Market 257 (Dec. 2015).