> So in theory, if you can pay $1,000 to buy your own debt, somebody else should be willing to bid at least $1,001.
Not at all true. Suppose I have, for instance, a debt dischargeable in bankruptcy, which has a current balance of $10,000, and $1,000 in assets. I might be able to pay $1,000 to purchase and settle the debt, but I'd have very little reason to pay $1,000 on the debt without it being a full settlement, and there's pretty much no reason for any third party to be willing to pay $1,001 (or any value not substantially less than $1,000) to purchase the debt.
That's why I qualify all of this with a legal system that is able to seize the assets of debtors when needed. In that case, it doesn't matter whether you want to pay $1,000 or not, you will be made to.
> That's why I qualify all of this with a legal system that is able to seize the assets of debtors when needed. In that case, it doesn't matter whether you want to pay $1,000 or not, you will be made to.
Sure, if you have a legal system that has zero cost, zero risk of not getting the outcome you expect, takes zero time to operate, doesn't include bankruptcy or other avenues of discharging debt, and debtors never have multiple competing claims on their assets that are not part of the same package being sold... if all that is true, then the amount a third-party purchaser should be willing to pay for debt should generally be the lesser of the face value or the total of the debtor's assets.
However, those assumptions bear basically no resemblance to any set of conditions that applies in the real world, so its all meaningless.
Keep in mind that if I can settle a debt for $1000 I may very well be able to lend money from friends or family to do so, whereas I'd likely be unwilling to do that if I would face certain bankruptcy regardless.
There are many situations where a person may not have any seizable assets, but still have the ability to raise cash to cover a firm offer to settle a debt.
Well, you maybe willing to pay $1000 to settle the debt when the nice lady from the bank called you, but chances are you will be willing to pay more if a debt collector shows up at your door.
Not at all true. Suppose I have, for instance, a debt dischargeable in bankruptcy, which has a current balance of $10,000, and $1,000 in assets. I might be able to pay $1,000 to purchase and settle the debt, but I'd have very little reason to pay $1,000 on the debt without it being a full settlement, and there's pretty much no reason for any third party to be willing to pay $1,001 (or any value not substantially less than $1,000) to purchase the debt.