Jamie

I mean it should be feasible. Once you work out what the costs involved in setting up a company. There is a likely a process where you bid against other companies to buy debt. Then you just get to send people nice letters saying you won’t chase the debt or you’ll write it off.

At the risk of being downvoted here is what an LLM says for someone based in the UK. It looks like there are some regulatory licenses we would need to but I am down to try this.

Setting up a debt acquisition company in the UK to buy and forgive debt is a noble idea, but it involves navigating some legal, financial, and regulatory challenges. Here’s a step-by-step guide to get started:

1. Incorporate Your Company

• Structure: Register a private limited company (Ltd) through Companies House. This structure limits your personal liability.

• Name and SIC Code: Choose a unique company name and use an appropriate SIC code (e.g., 64999 for financial intermediation not elsewhere classified).

• Directors and Shareholders: Appoint at least one director (can be you) and determine share distribution.

2. Register for Financial Regulation

• FCA Authorisation: You’ll need authorisation from the Financial Conduct Authority (FCA) since debt purchasing and management are regulated activities. Apply via the FCA website and expect a fee.

• Consumer Credit Licence: Obtain a consumer credit licence if you’ll be dealing with consumer debts.

3. Develop a Business Plan

• Mission Statement: Clearly state your goal to buy and forgive debt.

• Funding Strategy: Determine how you’ll finance the purchase of debt (e.g., donations, grants, or investor backing).

• Debt Acquisition Strategy: Focus on purchasing heavily discounted debt, often found with collection agencies looking to offload defaulted accounts.

4. Secure Funding

• Donations or Crowdfunding: Platforms like GoFundMe or Kickstarter can help raise funds.

• Grants: Research grants for non-profits or social enterprises.

• Investors: Look for impact investors interested in social good.

5. Buy Debt Portfolios

• Debt Brokers: Contact brokers who sell distressed debt. They usually sell for pennies on the pound.

• Types of Debt: Focus on unsecured consumer debt (credit cards, medical bills) for easier acquisition and forgiveness.

• Due Diligence: Review the legality and status of debt portfolios before buying.

6. Forgive the Debt

• Notification: Inform debtors in writing that their debt has been forgiven with no tax consequences.

• Debt Registry: Ensure the debt is marked as resolved or forgiven in credit bureaus if applicable.

7. Tax Implications

• Corporation Tax: Even if forgiving debt, you may still owe tax on donations or other income.

• Gift Aid: If you register as a charity, you can benefit from Gift Aid on donations.

8. Compliance and Reporting

• Annual Returns: Submit financial statements and annual returns to Companies House and the FCA.

• GDPR Compliance: Handle debtor information in line with GDPR regulations.

9. Marketing and Transparency

• Website: Create a transparent website detailing your mission and impact.

• Impact Reports: Publish reports on debt forgiven to build credibility.

Would you need more detail on any of these steps?