Frequently Asked Questions
Q: How much of the portfolio sale price is donated to the designated non-profit?
A: A minimum of 55% of the sale price for debt portfolios with a small face value up to 80% for larger bad debt portfolios.
Q: Once a company decides to donate their charge-off accounts, how long does it take for the NPO to receive the cash donation?
A: As soon as 45 days depending on how quickly the company provides the debt portfolio. The sales process itself can often be completed in two – three weeks.
Q: Why is the process for medical facility accounts unique and different?
A: Many factors require a completely different framework for medical accounts. Therefore, United Asset Group in consultion with leading industry experts, has developed a system for medical accounts that affords the unique protection needed by hospitals on behalf of their patients. For more information, click here.
Q: What factors influence the value of a charge-off debt portfolio?
A: Age of the accounts, type of account, number of times it has been sent to collections, Information available on the account and other factors.
Q: What do charge-off portfolio buyers typically pay?
A: There is a wide variation in valuation of these portfolios due to the factors mentioned above. Most portfolios will sell in a range of ½ cent on the dollar to three cents on the dollar. Price variations above and below this range will occasionally occur.
Q: Why does United Asset Group use other companies to sell the debt portfolios?
A: United Asset Group has agreements with debt portfolio sales affiliate companies for all portfolio sales to ensure the maximum bid prices will be obtained. This assures confidentiality throughout the process. Since bidders on the debt portfolios have no knowledge the portfolios are donated or of the donation process, bid prices for the portfolios cannot be affected.
Q: What is the risk to the NPO?
A: None. The NPO plays no part in the portfolio sales process. The NPO only receives a cash donation from the donor company. The NPO signs no legal documents or agreements. A United Asset Group portfolio sales affiliate handles the sale of the debt portfolio. Bidders on the debt portfolios have no knowledge the portfolio has been donated or of cash donations to a NPO.
Q: What is the risk to the company donating the debt portfolio?
A: None. The company donates accounts that have already been written off and are therefore not assets so the donation does not change or affect the corporate balance sheet. Making the donation is often as simple as running a charge-off debt report. The portfolio sales agreement protects the corporate donor by specifying that the ownership transfer of the receivables is complete, “as is” and without recourse.
Q: Why don’t companies just sell their bad debt portfolios directly to buyers?
A: A few companies do. But most of the time, companies do not want to divert time and resources to do this. Since this is not their expertise, most companies conclude they are better served using their limited resources to gain market share and stay ahead of the competition. But if United Asset Group handles the sale process, many companies would be happy to donate these accounts if it supports a worthwhile cause.
