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Since the economic downturn began in the U.S. in 2008, the fortunes of ARM companies have largely mirrored the broader business environment. Debt collection agencies are particularly susceptible to high unemployment, inflated consumer bankruptcies, and plummeting housing pricing. Combined with a general tightening of credit standards, the ARM industry is more tied to macroeconomic trends than ever before.
The national credit card delinquency rate (the ratio of borrowers 90 or more days past due) decreased to 0.69% in Q1 2013 from 0.73% in Q1 2012. The delinquency rate experienced a sharp 18.8% seasonal decline from the end of 2012, when it stood at 0.85%.
For the second straight quarter, the percentage of Americans with at least one account in the third party debt collection system hit an all-time high in the first three months of 2013. Close to 15 percent of consumers have an account being worked by debt collectors.
The latest rumblings about the debt collection and accounts receivable management industry are a mixed bag for credit and collection professionals.
The Commerce Department’s Bureau of Economic Analysis said Friday that real gross domestic product (GDP) in the U.S. grew at a 2.5 percent annual rate in the first quarter of 2013.
In an employment environment where good news is increasingly hard to come by, two collection agencies separately announced major expansions Tuesday, adding hundreds of jobs to local economies that need the boost.
The issue of students and student loan debt will probably be perennial: education costs are increasing; student loans and private loans are almost the norm.
Severe derogatory or charged-off balances, the bulk of student loan write-offs, for the first two months of the year hit $3 billion, an increase of more than 36% from same time a year ago ($1.9 billion) while balances in bankruptcy remained level at $0.5 billion.
The Commercial Collection Agency Association reported Wednesday that accounts placed with CCAA members increased only slightly in 2012. The total dollars placed for collection increased by approximately 1.09% and the number accounts increased by less than one percent.
Over recent months, consumers have been piling on the debt at the highest rate since the start of the Great Recession more than 4 years ago. What does this mean for ARM professionals in search of increased placement volumes and improved liquidation results?
The percentage of Americans with at least one account in third party collections rose to an all-time high in the fourth quarter of 2012, according to the Federal Reserve Bank of New York. The average account balance of those in collection decreased.
In its Quarterly Report on Household Debt and Credit for the fourth quarter of 2012, the FRBNY noted that 14.6 percent of American consumers had an account in the third party debt collection system, up from 14 percent in the third quarter.