Debt collectors buy the debt, it starts out when CC companies and such write off the debt, and sell it off in batches. So ACME Collections buys it straight from CC companies and banks. This is the most expensive debt to buy, because it has the most worth, because it's the newest debt, and most likely that it can be collected. These are the (odd to say) better debt collection agencies. They generally run a cleaner business, they sort of have to if they want to buy CC debt straight from banks and such. So they buy a batch of debt from 1st United Bank of Anytown. Their collection people call the folks on the list, and/or they send out mailings to the last known good address. They work the list until they've squeezed as much out of it as they can. THEN, once they're finished with it they sell it to the next level down debt collector. Now this list has been worked, so these guys will be bottom feeding. So level 2 collection agency will pay a fraction of what the level 1 agency paid - and there will be a contract between the two stipulating a percentage that will be collectable. We're getting into the REAL scum-bag level here, and they're good at their scum-baggery. They call and push, and threaten, and make your life hell. When THEY'VE worked the list, if they couldn't collect the agreed upon percentage of debt, the contract will stipulate that the seller owes the buyer some cash, or more leads, or whatever. I think quite often they just buy leads in batches small enough, that if the seller starts selling shit - the buyer won't buy anymore of their shit lists. It's all super easy math.

Then, after level 2 collection agency starts to run dry, they sell it to the super, scum of the earth, dirt-bag is too good a name collection agencies at level 3. Then, after they coerce folks to pay debt that may be already paid, it gets sold again. The process almost has no end. The cost per "lead" goes down with each sale, until they're paying a penny for hundreds of names.