The Liquidation Threshold An Expert Intelligence Briefing
The Creditor's Dilemma: Workout vs. Sale
Deciding when to sell a charged-off portfolio versus pursuing internal recovery can make or break profitability. To provide clarity, we posed a central question to our network of industry principals:
"What is the most critical data signal to sell a charged-off portfolio immediately instead of attempting internal recovery?"
The following on-the-ground intelligence from market leaders provides two distinct, data-driven answers.
Signal #1: Cut Losses Once Costs Surpass Sale Value
The single most critical signal? When you're spending more money trying to collect on those bad debts than you'd get by just selling them to someone else today. Think of it like owning a broken-down car. You keep pouring money into repairs, hoping to drive it a bit longer. But at some point, you realize the repair bills are eating up more cash than the car is worth. That's when you sell it for parts and move on. Same with charged-off loans. If your team is calling, sending letters, and chasing payments, but hardly anyone is responding or paying—you're burning money. Meanwhile, debt buyers will pay you cash today for that portfolio. The smart lenders I've seen track this closely. They look at how much they're collecting each month versus how much it costs them to collect it. When the math shows they'll lose money by holding on, they sell immediately. Don't let ego or the "maybe it'll get better" mindset keep you in a losing position. If the numbers clearly show selling today puts more money in your pocket than holding and hoping, that's your answer right there.
— Bob Schulte, Founder, BrytSoftware LLC | LinkedInSignal #2: Offload If Recovery Rate Drops Below 45%
At Titan Funding, I learned the hard way about a 45% rule. When our portfolio recovery rate falls below that number, we sell. Immediately. Holding on longer just burns through cash for almost no return, and I've watched that play out over and over. The money we free up by selling is worth more than waiting around for tiny improvements that might not even come.
— Edward Piazza, President, Titan Funding | LinkedInThe Advisor's Mandate: Executing the Decision
This expert analysis confirms our core doctrine: the decision to sell is a data-driven mandate, not an emotional one. Once your internal metrics have crossed the Liquidation Threshold, the mission shifts from "if" to "how."
This is where our Off-Market Protocol provides the definitive solution. We take your portfolio—which you have now correctly identified as a candidate for sale—and execute a confidential, private treaty transaction. We architect a competitive environment among vetted institutional buyers to ensure that your decision to sell is rewarded with the maximum possible cash return, with absolute certainty and discretion.
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