Debt Relief Companies Continue to Get Squeezed by Lending
Recent data out in the Federal Reserve Bank of New York report, Quarterly Report on Household Debt and Credit, contains a stark graph that shows why the demand for traditional debt relief service niches has not been accelerating.
Traditional debt relief solutions, like credit counseling and debt settlement, have focused on the management and intervention of unsecured credit, credit card debt.
The data shows the largest segment of loan growth has been in areas that credit counseling and debt settlement companies have traditionally not operated in.
As you can see above, originations in mortgages, auto loans, and student loan debt are the growing categories.
But additional data shows consumers have been doing better overall with managing their debt and fewer are facing foreclosure and filing bankruptcy.
When credit reports were examined, the report noted, “About 213,000 consumers had a bankruptcy notation added to their credit reports in 2016Q3, 6% fewer than in the same
quarter last year.”
If anything, the growing opportunity is in the student loan assistance market. “Outstanding student loan balances increased by $20 billion, and stood at $1.279 trillion as of September 30, 2016,” said the report.
But this market has its set of unique challenges and risks for debt relief companies in both federal and private student loan assistance.