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How to sell charged-off debt: a step-by-step guide for creditors

Not legal or tax advice. General information for US creditors selling charged-off accounts, current as of October 19, 2026. Confirm the rules for your type of lender with counsel and your tax adviser.

Short answer: To sell charged-off debt, first check that a sale beats collecting the accounts yourself. Then share summary figures, sign a mutual NDA and send a data file to the buyers you are introduced to. Buyers make their offers to you directly, and you can turn them all down. If you sell, you sign the purchase agreement, get paid at closing, hand over the files, book the money and check whether Form 1099-C applies.

This guide takes you through selling charged-off debt one decision at a time, then lays out the stages in order, through the work after closing.

Key takeaways

A sale turns charged-off accounts into cash now. After that, the buyer owns them and keeps whatever it collects.
Start with business-level figures only: asset type, face value, account count and charge-off dates. No consumer data until a mutual NDA is signed.
Clean up the file and build the data tape (the spreadsheet of accounts) before you invite bids. Give every buyer the same bid rules.
Compare whole contracts, not just prices. Get paid by wire before any account files change hands.
Banks generally book money from selling fully charged-off loans as a recovery through the allowance. A sale by itself is not a Form 1099-C "identifiable event"; check with your tax adviser.
The work doesn’t stop at closing. Agree in writing how long the buyer can request account documents after the sale, how many, and whether there is a charge.

On this page

Want to see if buyers are interested in your charge-offs?

Confidential introductions to debt buyers, free for sellers of charge-off portfolios. Summary business data only, and a mutual NDA before any documents. No obligation. We are paid by buyers through a per-introduction fee; sellers pay nothing.

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Or estimate a price range first

How do you sell bad debt?

You sell bad debt the same way as any charged-off debt: written-off accounts you still own can be sold to a debt buyer for a share of face value. Gather summary figures, sign a mutual NDA, send a data file to interested buyers, compare their bids, then sign a purchase agreement and get paid at closing.

In 2025, three large public debt buyers paid on average about 6 to 14 cents per dollar of face value; see how much you can sell your debt for. The seven steps below cover each stage in order.

Step 1: Is selling worth more than collecting in-house?

Here's the trade-off. If you sell, you get cash now. The buyer owns the accounts, keeps whatever it collects, and you stop working them. If you keep them, you keep collecting and keep paying for it. So put two numbers side by side: what you expect to net by collecting in-house, and the likely sale price. Older accounts usually sell for less (see pricing below).

For banks, OCC guidance sets out this test. OCC Bulletin 2014-37 is supervisory guidance, not a regulation. It says a bank's debt-sale policies should require a financial analysis showing why selling is more beneficial than other options, such as managing collection internally (OCC Bulletin 2014-37). If you aren't a bank, the same test still works.

Selling charged-off debt is legal. Which rules apply depends on who you are; see is it legal to sell debt? If a bank partner made your loans, first confirm who actually owns the receivables and who has to approve the sale (see BNPL and fintech charge-offs).

Step 2: Which portfolio figures should you gather first?

You don't need account files yet. Start with business-level figures:

Asset type (for example credit card, personal loan, auto deficiency, medical or utility).
Total face value and account count.
Charge-off dates, or the range of dates.
If you have them: which states the accounts are in, and what collection work has been done since charge-off.

For example, the sample summary on our home page reads: credit card charge-offs, 4,200 accounts, $6.1M face value, charged off 2023–2024, never sold (illustrative data, not a real portfolio).

That's enough for us to start introductions. It also lets buyers tell you whether your file fits their criteria. Don't send names, account numbers, Social Security numbers or any other consumer data at this stage. SellChargeOffs never asks for consumer personal information at the summary stage.

Have these figures? That's all we need to start introductions. Request introductions We are paid by buyers through a per-introduction fee; sellers pay nothing.

Step 3: How do you prepare the file before buyers see it?

Buyers set their price from two things. One is the data file, often called the "data tape": a spreadsheet with one row per account. The other is a sample of account documents, which the industry calls "media". Neither should move until a mutual NDA is signed. Two jobs come first:

Clean the file ("scrub" it). Take out or flag accounts that shouldn't be sold, and make sure the balances reconcile. See which accounts to remove first.
Build the tape and gather the media. The data-file checklist lists the fields buyers price on. The media checklist lists the documents you should be able to produce.

Send the data file only to buyers you approve, over a secure channel.

Step 4: How do you invite and compare bids?

Invite more than one interested buyer. Give each one the same deadline, bid format and key terms (see the bid steps in a portfolio sale).
Ask every buyer to quote the same way and to list every condition on its bid. That way you're comparing like with like.
Expect the buyer you pick to re-check a sample of files against the data tape before it signs. What it finds can change the price or take accounts out of the sale.

Judge each bid on the whole contract, not just the price, and check each finalist before you sign; see how to choose a debt buyer. Selling new charge-offs on a schedule instead of once is "forward flow"; see forward flow agreements.

Step 5: What should you negotiate in the purchase agreement?

The purchase agreement (often called a debt sale agreement) is the contract that controls everything. It sets the price, the cutoff date (the date that fixes which accounts and balances are in the sale), closing and funding, and your representations and warranties (the promises you make about the accounts). It also covers the buyer's repurchase rights, called "put-backs" (sending an account back to you for a refund or a replacement), data security, resale limits and each side's compliance duties. Before you sign, check that:

Your reps and warranties are accurate and limited.
Put-back rights have clear triggers and a set time window.
Document requests after the sale have limits: how many, how fast you must answer, and what they cost.
Resale (the buyer selling your accounts on to someone else) is banned, needs your consent, or has conditions you accept.
The wire lands at closing before any full account files change hands.

Have your own lawyer review it. For clause-by-clause detail, including chain of title (the paper trail that shows who has owned each account), see debt sale agreement: reps, putbacks and chain of title.

Step 6: What do you do at closing and after the sale?

Funding before files. Before you sign the bill of sale (the document that transfers ownership), confirm the wire has landed. Then send the files only over the channel the agreement names, in the format it sets (closing mechanics).
Payments after the cutoff. Some customers will keep paying you after the cutoff date. Follow the agreement on who keeps that money and how fast you pass it on.
Credit reporting. If the OCC supervises your bank, OCC Bulletin 2014-37 (guidance) says your credit bureau reporting should be up to date and should accurately reflect the sale or transfer of the debt to the buyer.
Customer notice. The same OCC guidance expects the banks it supervises to make sure customers get timely notice: that the debt was sold, the amount transferred, and the buyer's name and address (OCC Bulletin 2014-37). State rules vary, so if you aren't an OCC bank, confirm yours with counsel.
Media requests. Expect the buyer to ask for account documents, and answer on the terms you agreed.

Step 7: How do you book the proceeds and handle Form 1099-C?

If you're a bank, start with the OCC's Bank Accounting Advisory Series (staff interpretations). It says money from selling fully charged-off loans should be accounted for as a recovery through the allowance for credit losses (ACL), consistent with how the bank had charged off the loans (OCC Bank Accounting Advisory Series, Topic 2F). For journal entries and call report lines, see charge-off accounting.

Form 1099-C is the IRS form for canceled debt. What triggers it is an "identifiable event". The rules give examples such as:

a bankruptcy discharge;
an agreement with the debtor to cancel the debt for less than full consideration;
a decision or defined policy to stop collecting and cancel it (IRS Instructions for Forms 1099-A and 1099-C; 26 C.F.R. § 1.6050P-1(b)(2)).

Selling an account is not on that list. Only the filers the rules name have to file, such as banks, credit unions, federal agencies and businesses whose significant trade or business is lending money. And only for canceled debt of $600 or more. If an identifiable event happened while you owned an account, or you stop collecting accounts you don't sell, ask your tax adviser whether you must file.

How long does a charged-off debt sale take? The steps, in order

There’s no standard clock: timing varies by portfolio, and clean, well-documented files can close faster. We didn’t find a current public source that gives a typical start-to-finish time for a one-time sale or typical contract time frames, so we don’t give them. Your terms are negotiated.

Stage	What happens	Who acts	Cited time frame
1. Summary data	Business-level figures only, no consumer data. That's enough for us to start introductions. See Step 2.	You	—
2. Buyer interest	Buyers say whether your file fits. You're introduced only if you agree; nothing is committed.	Buyers, then you	—
3. Mutual NDA	Signed before any data tape or sample documents move.	Both sides	—
4. Data file and due diligence	The tape goes securely to buyers you approve, who sample accounts and request media (Step 3). If the OCC supervises your bank, OCC Bulletin 2014-37 (guidance) says you should check a buyer before a new relationship.	You, then buyers	—
5. Bids	Bids arrive by your deadline, in your format; see Step 4.	Buyers, then you	—
6. Purchase agreement	Terms are negotiated; see Step 5. OCC Bulletin 2014-37 says OCC-supervised banks should make sure the contract addresses resale.	You and the buyer	Negotiated: put-back windows, document-request periods and reply times are set in your contract. We know of no current public benchmark.
7. Funding and closing	Wire first, then bill of sale, then full files; see Step 6.	Buyer, then you	—
8. After the sale	Consumers are notified (bank notice and credit-reporting duties: Step 6). You forward payments that still reach you. Requests and put-backs continue while their windows are open. A sale alone isn't a Form 1099-C event (Step 7).	Buyer and you	Buyer’s notice to consumers and forwarding of stray payments: set in your contract. Credit bureaus: an RMAI-certified seller that reported the accounts notifies the bureau of the sale and new owner within 30 days, or deletes the tradeline (RMAI Standard A11).
9. Forward flow, if ongoing	Set up once; new accounts then sell on a schedule at a unit price agreed up front. If the OCC supervises your bank, OCC Bulletin 2014-37 (guidance) says buyer due diligence should be repeated periodically. See forward flow agreements.	Both sides	Set in your contract.

What creditors who sold, or tried to sell, posted publicly

We found only a handful of first-hand public posts. These are the ones we picked, not a representative sample, and several are about tenant debt or judgments rather than consumer credit. One post we found included one landlord’s claim of about 40 cents on the dollar. For a benchmark, see the public-company figures in the pricing section below.

One quote isn't the market. On Reddit (r/debtbuying), a holder of old Pennsylvania judgments asked in August 2024 what they could get. When another commenter later suggested 1 to 3 cents on the dollar, the same person replied in January 2025: "Youre 5 months too late. We got 4.5" (units not stated) (source).
Some debt has little buyer appetite. On Reddit (r/OntarioLandlord, September 2026), a landlord (Ontario, Canada) wrote: "I sold my renters debt for 14% and considered myself lucky they bought it." They added that back rent is seen as close to unrecoverable (source).
The highest bidder isn't always the best buyer. In trade press (insideARM, March 2011), a hospital system's director of patient accounts (medical debt) described leaving its long-time buyer for premium prices, then going back. The result: "a strong, perhaps less profitable ongoing partnership with the same buyer for eight years with minimal complaints" (source). Weigh complaint history, not just price; see how to choose a debt buyer.
Long in-house chasing costs you time. On Reddit (r/smallbusiness, March 2026), a credit staffer at a large B2B supplier said they spent six months chasing an unpaid order of about $18,000 before, in their words, they "sold the debt to collections and wrote the rest off" (source). Public filings say more seasoned portfolios sell for a lower share of face value than newly charged-off ones (see pricing below).

Avoid these surprises: get a range and a buyer-readiness check on your file first.

Request introductions

Or estimate a price range first

What price range should you plan around?

Bids are usually a percentage of face value. Age, debt type, balance size, state mix and documentation all affect the number.

Averages, not offers: In its 2025 annual report, Jefferson Capital reported an average purchase price of 6.4 cents per dollar of face value; by our calculation from their 10-K purchase and face-value figures, Encore Capital paid about 11.9 cents and PRA Group about 14.2 cents (Jefferson Capital 2025 10-K; Encore Capital 2025 10-K; PRA Group 2025 10-K). These are company-wide averages for each buyer’s 2025 mix, not offers. For more detail, see how much debt buyers pay, or estimate a price range for your file.

Selling a specific type of charged-off debt?

If you are selling	Read next
Bank or credit union portfolios	Debt sales for banks and credit unions
Credit card and consumer charge-offs	Charged-off credit card and consumer debt
Auto deficiencies and BHPH notes	Auto loan deficiencies and BHPH notes
BNPL and fintech loans	BNPL and fintech loan charge-offs
Medical receivables	Medical debt and healthcare receivables
Utility and telecom accounts	Utility and telecom receivables
Payday and short-term loans	Payday and short-term loan portfolios
Private student loans	Private student loan portfolios
Business (B2B) receivables	Unpaid B2B invoices and commercial debt
A small lender's charged-off loans	How a small lender sells charged-off accounts

How does SellChargeOffs help you sell charged-off debt?

You share summary figures only (asset type, face value, account count and charge-off dates), with no consumer data. If a buyer's criteria fit your file, we introduce you, but only if you agree. Account data moves only after a mutual NDA, and only to buyers you approve. Buyers make their offers to you directly. You decide whether to sell, and you sign your own purchase agreement with the buyer. SellChargeOffs is not a debt buyer or a broker, is not a collector and never contacts consumers. We are paid by buyers through a per-introduction fee; sellers pay nothing.

Ready to meet buyers? Our confidential service for sellers introduces you to interested buyers. See how SellChargeOffs works for the four stages from summary to sale.

Next step: request introductions from summary figures, or read how a debt portfolio sale works for the full process.

Sources

OCC Bulletin 2014-37, Consumer Debt Sales: Risk Management Guidance: occ.gov
Jefferson Capital, Form 10-K for 2025 (filed March 13, 2026): sec.gov
Encore Capital Group, Form 10-K for 2025 (filed February 25, 2026): sec.gov
PRA Group, Form 10-K for 2025 (filed March 2, 2026): sec.gov
OCC Bank Accounting Advisory Series: occ.gov
IRS Instructions for Forms 1099-A and 1099-C: irs.gov
26 C.F.R. § 1.6050P-1, Cornell LII: law.cornell.edu
RMAI, Receivables Management Certification Program Governance Document, Version 14.0 (effective March 1, 2026), Standard A11: rmaintl.org

How to sell charged-off debt FAQ

Can I sell only some of my charged-off accounts?

Yes. You decide which accounts go into the file, for example one product line or one charge-off year, and you scrub out accounts that should not be sold. Buyers price the file you offer, so give the account count and face value for exactly what you plan to sell.

Can I keep collecting the accounts while I look for a buyer?

Yes. Until closing the accounts are still yours, and your usual collection and compliance duties continue. The purchase agreement sets a cutoff date that fixes the balances and accounts in the sale, and says who keeps payments that arrive after it.

Can I turn down every bid for my charge-off debt?

Yes. Requesting introductions does not commit you to sell. You can turn down any offer a buyer makes you, and nothing is sold until you sign a purchase agreement with the buyer.

How do I sell charge-off debt if I have never sold accounts before?

Start with confidential introductions from summary figures, then put the policies, data file and purchase agreement in place one at a time. First-time sellers often take longer because policies, documentation and the purchase agreement are new, and clean, well-documented files can close faster.

Can I still sell charge-offs that are several years old?

Yes, buyers do purchase older debt, but usually for less. Jefferson Capital’s 2025 annual report says the average purchase price as a share of face value is higher for newly charged-off portfolios than for more seasoned ones. Accounts past the statute of limitations raise separate issues.

Can I sell a single debt someone owes me?

Yes, if you own it and can document it, though this guide is about portfolios. One debt can be easier to sell once a court has entered a judgment, because the judgment records what is owed; see how to sell a court judgment. For one unpaid business invoice, see selling B2B receivables.

Where should you go next?

General information only, not legal or tax advice. SellChargeOffs is not a debt buyer or a broker, and is not a collector. We are paid by buyers through a per-introduction fee; sellers pay nothing.