Debt Collectors Find Dry Well in Southern California: Story

Are collection agencies and their results a leading economic indicator? Some think so, and the indication is for continued difficult times for the U.S. economy, according to an article on the industry this weekend in the Los Angeles Daily News newspaper.

The article, “Collection agencies find more work, less success,” by James Hames, offers interviews with some company owners based in the Los Angeles-area. The general theme is one of consumers with their backs to the wall who would like to pay their debts but can’t.

The article quotes Ron Grossblatt, CEO of Grant and Weber in Calabasas, Calif., saying that "Business is not great. If they don’t have the money, they can’t pay us."

And Clint Sallee, CEO of Fidelity Creditor Service Inc., said his Glendale-based firm is working more
accounts but that revenue for each has "contracted."

Sallee said that the debt collection industry has its finger on the pulse of the consumer everyday, making it a leading economic indicator. "We are a month or two ahead of a CNN headline," Sallee said. "We’re a barometer for unemployment."

Meanwhile, Dale Van Dellen, president of Account Control Technology in Canoga Park, said that people can’t refinance their homes in the current economic downturn. Even consumers that are paying off their debts are paying it off at a slower pace.

"The average payment is lower," Van Dellen said, "much less than a year ago." ACT primarily collects debt for educational institutions and the U.S. Department of Education.

Another problem is the rising cost of fuel, according to the paper.