U.S. banks are sitting on a $1.03 trillion mountain of credit card loans. More borrowers are starting to default. Yet lenders know they can't sell souring debt to just any collector.

That's all good news for bidders who make the cut.

Sales of bad card loans are climbing — while prices are falling — setting up some of the largest debt collectors for better times. Bidders now pay about 10 to 15 cents for every dollar of loans, according to a person with direct knowledge of the industry's pricing. That's down from 13.5 to 20 cents two years ago. Meanwhile, some collectors say they're actually having more success coaxing borrowers to repay.

Encore Capital Group, one of the largest publicly traded collectors, probably will see profit jump 31 percent this year to a record $109 million, according to the average estimate of four analysts surveyed by Bloomberg. After bottoming out in 2015, the firm's so-called cash collections multiple has reached 2.0, meaning Encore recoups double what it pays to buy loans.

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"The big driver does seem to be just the increased supply," said Bose George, an analyst at Keefe, Bruyette & Woods. After the financial crisis, borrowers and lenders became more disciplined, so fewer loans soured. "Now, finally, we've seen an increase as the books have gotten bigger and they've gotten more seasoned."

There's no sign that mounting write-offs will abate soon. Analysts expect the nation's five largest credit card issuers — JPMorgan Chase, Citigroup, Capital One, Bank of America and Synchrony Financial — to write off $29.4 billion in debt this year, up 8.8 percent from last year.

Debt collectors have also turned to technology to help boost collection rates, which in turn improves returns. At Encore, for example, new phone-dialing systems have helped reduce the time that its operators sit idle, improving their productivity, the firm wrote in a filing last month.

Not all banks sell their customers' debts to collectors. Those that do have become more selective. After the 2008 financial crisis, many smaller players entered the market and were too aggressive, hounding borrowers relentlessly. The scene made headlines, prompted stiffer regulation and turned some millennials off credit cards altogether. Now banks typically limit who can bid, and make them sign contracts blocking resales of debts to less savory players.

That's helped consolidate much of the U.S. collection industry to firms such as Encore, its largest publicly traded competitor, PRA Group Inc., and the closely held Sherman Financial Group. Some have been telling investors to watch write-off rates very closely.

"We'll see how it goes but, all things being equal, the higher that number goes, the more chances we'll have to improve our pricing somewhat," PRA Chief Executive Officer Kevin Stevenson told analysts on a conference call last month.

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