Debt collection

Here’s a sobering economic indicator: freshly charged off consumer debts are now selling for what tertiary debts — those previously placed with two collection agencies — commanded just a few years ago.

The average credit score for U.S. consumers dropped six points to 671 at the end of December from 677 at the beginning of the year, according to a report released this week by Credit Karma Inc., a San Francisco-based company whose Web site tracks credit scores. Credit Karma based its data on some 87,000 Credit Karma users. Average credit scores have remained stable since October, the firm notes.

Nearly three million homeowners received at least one foreclosure filing in 2009, setting a record for the number of people falling behind on their mortgage payments, according to RealtyTrac, an online marketplace for foreclosure properties, and its Foreclosure Market Report.

Several companies in the collectio and debt-buying industries made large contributions to charities in 2009 and, specifically, during the holidays. The following is the start of a roll call listing those companies and their efforts. This list, with the detailed information following, will grow as more information is sent to Collections & Credit Risk. Contact Darren Waggoner at darren.waggoner@sourcemedia.com.

The Federal Trade Commission's study of nine of the largest consumer debt buyers has industry participants concerned the investigation will be one-sided and lead to an unfair industry clampdown. Ultimately, some insiders believe the fallout will cause delinquent debt prices to drop.

U.S. revolving credit, 98% of which is credit card debt, fell to $874 billion in November from a revised total of $887.7 billion in October, the largest dollar-value drop since records began in 1968, according to a Federal Reserve G.19 report on consumer credit released Friday.

The Federal Trade Commission today identified the nine debt-buying companies that it has ordered to turn over information about their purchasing and collection practices.

The Federal Trade Commission has concluded a case against collection agency Academy Collection Service Inc. (ACS) and alleged Fair Debt Collection Practices Act (FDCPA) violations by imposing civil penalties totaling $675,000 against Albert S. Bastian and Keith L. Hurt III.

Lawsuits citing alleged Fair Debt Collection Practices Act (FDCPA) violations reached an all-time mark in 2009 at 8,287, easily topping the record of 5,188 set a year earlier, according to data from U.S. District Court complaint dockets.

Financial services companies currently face the highest card default and charge-off rates in more than 20 years, and uncollected debt is expected to grow through the end of 2009. As debt rises and internal resources shrink, the job of collections increasingly falls to customer care.

E-mail Darren Waggoner at darren.waggoner@sourcemedia.com to comment on this developing story.

For the third consecutive month, the Credit Manager's Index is signaling that the recession is over and the economy is expanding, according to a report by the National Association of Credit Management (NACM).

Seventy-six percent of more than 6,100 consumers polled by the National Foundation for Credit Counseling (NFCC) picked "decrease debt" as a top financial resolution for 2010. But while the collection industry looks favorably at that goal, NFCC officials are concerned about where other consumer priorities ranked.

Home prices are leveling out after an unexpected rebound in the spring and summer while consumers are feeling a little better about the overall economy, according to two closely watched reports released on Tuesday.

After a two-month run of improvement, November charge-offs on credit cards rose about half a percentage point to 10.56%, according to Moody's Investors Service in its latest Credit Card Indices report. The delinquency rate for November also rose, to 6.2%.

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While banks and government agencies are increasing efforts to save troubled home loans, the attempts thus far have not slowed a rise in foreclosures, according to a report released this week by the Offices of Thrift Supervision (OTS) and Comptroller of the Currency (OCC).

The Education Department has released new data on the percentage of students at more than 5,000 colleges and universities who defaulted on student loans over a three-year period.

The benefits of custom scoring models are becoming more obvious and the cost has plummeted, but little attention is being paid to developing better ways for risk managers to implement them.

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