Charged-Off Debt Sale for a Regional Credit Card Issuer

Background: With low recovery rates identified in a prior collections diagnostic, Client engaged AQN to develop a debt sale strategy and solicit bids on their behalf

Outcome: Backbook debt sale produced a one-time profit of $10.1MM and an expected $3MM of annual profit for the forward-flow strategy

AQN’s Approach:

  • Developed segmentation and associated recovery curves based on historical Collections performance with charged-off debt

  • Leveraged internal model to calculate break even threshold for assorted populations

  • Solicited bids from three leading debt recovery firms for each of the debt categories and segments

  • Identified opportunities for Client to improve recoveries performance on remaining populations

Key Results:

  • AQN developed a strategy to sell different categories of restricted and unrestricted debt to each of the recovery services to maximize profits

  • Identified opportunity to achieve higher returns through internal recoveries for customers who had engaged a third-party settlement service

  • Recommended “forward-flow” strategy to sell charged-off debt on an ongoing basis