Aug 29, 2013 Philip Burgess
The debt collection industry continues to thrive in light of a recovering economy in the United States and record high volumes of outstanding loans from the Great Recession. While more enforcement agencies have had to step in and penalize those that are not following the Fair Debt Collection Practices Act (FDCPA), those that are in line with the law and focus on exceptional operations stand to be very successful in the coming years.
One of the biggest signs of the recovering economy has been the substantial drop off in severely delinquent accounts, which has been at record lows for several years now. Businesses and consumers seem to be better positioned to pay off their debts and take out new credit lines than anytime in the past several years.
Second quarter figures
InsideARM recently reported that a new study from the Federal Reserve Bank of New York revealed the U.S. population continued to have a steady amount of outstanding loans in the second quarter of this year. According to the news provider, collection actions were present on roughly 15 percent of all Americans' credit reports in the period ending this past July.
This is very close to the highest recorded rate, which was found in the first quarter of this year, while the average balance dropped more substantially. The source explained that the average debt collection account was at $1,433 in the first quarter and dropped to $1,409 last quarter, falling far below the record high that was seen in the second quarter of last year.
"Although overall debt declined in the second quarter, households did increase non-housing debt, led by rising auto loan balances," Andrew Haughwout, vice president and research economist at the Federal Reserve Bank of New York, said, according to InsideARM. "Furthermore, households improved their overall delinquency rates for the seventh straight quarter, an encouraging sign going forward."
Better position, stronger performance
The increasing number of accounts opening up, and available for collection, means agencies need to be opportunistic in the coming years, while remaining solidly within the confines of the law. Failing to comply with regulations will have substantial repercussions, but simple legal actions will not yield the best performances.
Collectors should consider training all employees in the best practices of customer service, data management and all other applicable responsibilities to get the most out of a revitalized economy.