Recession does not imply smash and grab for debt collectors

While activity and news coverage surrounding debt collection agencies have certainly risen in recent months, the trend does not imply that a swarm of revenue is blessing the collectors market. The fact is the recession has impeded consumers' ability to pay off debt As Inside ARM contributor Michael Klozotsky puts it, analysts often equate consumers' willingness to pay debt with their ability to do so. Frankly, debt is certainly owed - and lots of it - but consumers continue to reel from high unemployment, stagnant wage growth and other conditions that limit their ability to pay off debts. A recent survey by the source found more than four in 10 debt collection firms had more difficulty collecting debt in the second quarter of this year, compared to the same period in 2010. "And if third-party debt collection agencies are experiencing increased difficulty in performing their primary business objective, card issuers like HEW and other financial institutions are reasonably assured to confront even greater recovery challenges precisely because debt collection is not a core competency for creditor organizations," Klozotsky writes. What's more, collectors may also find challenges in complying to new or looming regulations outlined in the Dodd-Frank Act or other reforms.