Occupy Wall Street campaigners buy-up debt to abolish it - Telegraph
So it is possible to buy distressed debt at knock down prices. I thought such secondary debt markets were for various collateralized debt packets, rather than the debt of identifiable individuals.Individuals or companies can buy distressed debt from lenders at knock-down prices if it the borrower is in default or behind with payments and are then free to do with it as they see fit, including cancelling it free of charge.
As a test run the group spent $500 on distressed debt, buying $14,000 worth of outstanding loans and pardoning the debtors. They are now looking to expand their experiment nationwide and are asking people to donate money to the cause.
It raises the question - could you buy your own debt? If I went out and borrowed 100k and then refused to make repayments - that debt would become 'distressed'. The resale value of that debt would drop to as little as 1000 euro. Could I then just buy it at that price and keep the 99k?