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Is Debt Collection a Dying Business?
March 3, 2014

Federal regulators are shining an increasingly harsh light on the debt collections practices of banks and third-party agencies, forcing many to drastically alter the ways in which they interact with delinquent consumers. American Banker outlines the changes underway and how they may trickle down to collections efforts around the nation.

Comments (2)
It is hard to predict what will happen to the Debt Collections Business, because there are too many parties involved in the fate of the business. What is clear is that "business as usual" won't keep it going. Banks are becoming more conservative and restrictive, which should reduce the pipeline of bad debt flowing through the system. The Federal Government is not showing any signs of backing off from their position to protect the consumer, whether for political or social motives. The consumer is bombarded with information regarding their rights and worse yet, ways in which they can avoid having to pay their debts. So all that said, all indications point to at least a significant reduction in the amount of debt being serviced and the number of companies to service the debt. I believe, and this is just a personal opinion, the time has come to change the model and reinvent the business model. How can Debt Servicing Companies play the role of collections and a source of debt relief? How can we change the model that is perceived as predatory collection practices, to debt resolution through counselling and solutions that truly fit within the capacity of the Debtor to pay what they can and find closure? Put another way, how can the Business model be structured so the debtor sees the industry as a solution and not a burden? If the business is to survive, the model has to change by becoming more consumer sensitive and driven less by bottom line profits. This will require the lending institutions to rethink their expectations of the debt servicer, and begin to work collectively to become a solution to the problem and not the problem.
Posted by ramosjoe | Tuesday, March 04 2014 at 6:48PM ET
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