Creditor Sale Proceeds on Charge-Offs
How original creditors should think about proceeds on a charged-off sale: bid vs placement yield, close cash, warranty reserves, and accounting vs cash.
DebtHub · Creditor pathway
Proceeds on a sale are cash at close minus whatever the PSA holds back. That is a different number than agency placement yield over 18 months. Finance teams mix the two and then wonder why the bid “looks low.”
Compare apples
Placement keeps title and drips cash. A sale moves title and pays at funding, usually 14–45 days from a complete file. Discount the placement stream. Then compare. Liquidity options: keep, place, or sell.
Reserves and warranty
If you offer a 90-day window for deceased, paid-prior, and ineligibles, expect some true-up. Tag those flags before the tape ships so the bid is not guessing. After-sale notes: after the sale.
Accounting treatment is your auditors’ problem. DebtHub will not sign an audit opinion. We will tell you what buyers paid on similar complete files, as education, not a valuation.
| Number finance asks for | What it actually is | Where it lives |
|---|---|---|
| Percent of face | Buyer recovery model, not your charge-off rate | Bid letter |
| Cash at close | Face × winning percent, minus agreed holdback | Funding wire |
| Placement yield | Fee share over time, you still own it | Agency reports |
| Warranty true-up | Ineligibles inside the PSA window | Post-sale support |
Questions this page answers
Why is the bid below our recovery forecast?
Your forecast assumes your cost of capital and your staff. The buyer’s model assumes theirs. They are not the same P&L.
Can we sell at book value?
Buyers do not bid book. They bid expected collect after their compliance cost.
Should we wait for better vintage?
Sometimes. Mixed old paper with no last-pay rarely improves by waiting.
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