Bankruptcy

A Puzzle

By Stephen Lubben

Working my way through the local paper today, I stumbled across a story on consumer credit. Against my usual inclinations, I read on. It tells the story of how banks routinely sell old debts, that is, debts past the statute of limitations, for about 0.2 cents per dollar. For my co-bloggers, this is probably old news.

But the question that occurs to me, is why do we allow such sales? Just as we don't allow markets to sell expired milk, no matter what the discount, it would seem that allowing sales of debts that can only be enforced by trick is unlikely to be socially useful or something that our banking regulators should condone.

Full post as published by Credit Slips on August 01, 2010 (boomark / email).