Creditor Claims Trading: What is next?
Bankruptcy Courts are seeing many consumer issues along with the increasing bankruptcy dockets. Therefore, Bankruptcy Judges are naturally becoming more sophisticated on the issues surrounding consumers. Recently I argued a case against a debt collector and one of the issues was the creditors purchasing of discharged debts. Why would a creditor purchase debts which are discharged by a Federal Court Discharge Order? Theoretically, these debts are no longer collectible.
Yesterday, I read an article about a company named Trade Receivable Exchange Inc (T-REX). This company built a business on bankruptcy claims trading. In other words, when a person or company files for bankruptcy, it's unsecured creditors must file a proof of claim in order to be considered for payment. (Secured Creditors have different rights which are outside the scope of this blog) So, T-REX create an internet auction house for the selling of claims. Basically, it is a place where distressed debt buyers could go and purchase bankrupt debt. It is important to note here that the debt being purchased has not yet been discharged as I alluded to before.
Recently, T-REX was sold to Restricted Securities Trading Network (RSTN). RSTN is another online trading platform which, in the past, restricted itself to the buying and selling of restricted securities and other illiquid assets. This acquisition did not receive much fanfare or press on Wall Street, but it may have major implications on the bankruptcy world for debt purchasers who appear as creditors in the bankruptcy world.
I will keep you posted.
This post was submitted by Carmen Dellutri, Esq. founder of The Dellutri Law Group, P.A. Carmen Dellutri is a Board Certified Consumer Bankrupty Lawyer and sits on the Board of Directors for the American Board of Certification. Mr. Dellutri is also one of the founding members of the Bankruptcy Law Network, Mortgage Law Network, Credit Law Network and Debt Law Network. Carmen Dellutri routinely reads the abusive debt collection blog published by Steve Otto, Esq.
