Comments on: How to Capitalize on Citi’s Collapse

By: Ryan Healy

Ryan Healy — Mon, 01 Dec 2008 23:37:42 +0000

@William – Thanks for the comment. Good observation. If Citi is bought out, then there may be room for negotiating a smaller liability.

@Shawn – Good point. I wonder, though… what if the bank that buys Citi then goes under because of all the bad debt they bought? What then?

By: Shawn Garringer

Shawn Garringer — Mon, 01 Dec 2008 20:56:03 +0000

Except Citi won’t declare chapter 11. They’ll be purchased by another bank, who will assume responsibility. Those debts are very valuable, and there is no way they’re just going to disappear.

By: William

William — Mon, 01 Dec 2008 18:23:09 +0000

Unethical? I’d say it’s walking a fine line. Doing it strictly with the hopes of a collapse that erases your debt is probably teetering on the brink of being unethical :-)

If you would have done it anyway, and the collapse does happen, I don’t think it is.

However, even if it is pushing the ethics envelope I’d probably try it. It’s not like the credit card companies are models of an ethical business.

Regardless of the ethics involved, I highly doubt that your debt would just disappear into the rubble. It’s more likely that someone else would buy the debt from Citibank for a large discount and they would take over the collection from you.

If that were to happen, it might still benefit you. For example, if another company bought the debt at let’s say 25% of face value, they might be willing to negotiate a lower payout for you. So you could possibly negotiate a deal to pay it off at 75% of face value.

They would still make a good return on their money and you would get a nice discount on the debt.

All theoretical of course, but there’s more than one potential upside to your idea.

By: Ryan Healy

Ryan Healy — Thu, 27 Nov 2008 14:49:22 +0000

In discussing this idea with my Dad over dinner, he indicated that Citi would ALSO have creditors… and those creditors would “pick up the chase” (so to speak) to collect on the debts owed them.

I can see how this might happen.

My question: Wouldn’t Citi’s creditors involve foreign banks? And how would foreign banks collect on debts owed by U.S. citizens?