If she turns it over to an agency, doesn't it become a debt that could be discharged through bankruptcy proceedings leaving her with nothing?
Yes, but if one SELLS a debt at a discount, any recovery belongs to the debtholder, so that would be the assignee's problem, not the CPs in this scenario. Odds are, if the CP has not been able to collect in all these years, nobody will agree to "buy the debt", unless for a deep discount, as well they should.
AS one who works in collections, there is always the value of known "cash in hand" vs the value of a possible future collection to consider when chooosing a course of action. The old "bird in the hand" idea. People die with insolvent estates all the time - I see LOTS of insolvent estates. While one may technically still owe, if an agency were actually willing to pony up cash to buy the debt, my collector brain would say GO FOR IT, unless there is evidence the party may indeed have assets or future collectability.
Yeah, sure, they owe till they die, but PLENTY of people die OWING lots to lots of parties who end up writing off the debt in the end. Is CPs health known? Longevity of parents? Odds of having a pension or Social Security retirement of any consequence? Odds of having any assets unencumbered by mortgages, car loans, etc? Odds of dying and all assets automatically passing to a surviving spouse?
