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For a couple of years now collection agencies have battled declining liquidation rates that are being weighed down by high unemployment and consumers' inability to derive cash from the equity in their homes.
Two industry experts, however, have noted a recent consumer trend that could bode well for the industry. They say there is less consumerism as paying off debt is becoming en vogue with the general population.
"People aren't out buying the next new thing," says Lou DiPalma, managing partner at Garnet Capital Advisors, a Harrison, N.Y.-based debt broker. "They are trying to take care of their old debts."
Louise Epstein, president of Austin, Texas-based debt broker Charge-Off Clearinghouse, tells Collections & Credit Risk that she has noticed a similar trend.
"The fact that individuals are making more prudent financial decisions for their households, whether by choice or duress, gives them a greater opportunity to pay off the debts they have," Epstein says.
"Sad to say, the more people who walk away from their mortgages, the more disposable income they have to pay off their other debts. And there is going to be a lot more [people walking away from their mortgages]," she adds.
