FEW cheer the rising levels of America’s household debt, which reached a record $ 12.7trn at the end of the first quarter. Nearly 5% of the total, or $ 615bn, was in some stage of delinquency. One group, however, can barely hide its glee: third-party debt-collection firms, which try to recover mostly consumer loans on behalf of creditors without the resources to chase down bad borrowers themselves.
Business is expanding “at a robust rate”, says Keith Kettelkamp, the boss of Remex, a debt collector based in New Jersey whose clients include banks, utilities and musical-instrument sellers. Across the country more than 6,000 collection firms contact debtors more than 1bn times a year. One in eight Americans has an account with a third-party collector. The average amount outstanding is just over $ 1,300.
Third-party collectors have, it is fair to say, a dubious reputation: they are the target of more complaints from consumers…
The Economist: Finance and economics
