Debt Relief Industry Forecasts and Trends

Moody’s Releases News on Debt Relief Customer Pool

I would love t be a blind cheerleader for the legitimate players in the debt relief world that are helping consumers and doing it the right way. The news remains worrisome though. And when I have good news to report on the forecast for debt relief services you better believe I will share it with you.

In the past few months I’ve been publishing my forecasts of tough times ahead for debt relief providers due to a shrinking customer pool and decreased issuance of credit that would lead to an increased demand for debt relief services.

Moody’s has just release some new data which reinforces those points and adds some new information that continues my thumbs down demand for debt relief services.

Credit card defaults will reach a 20-year low by next year, Moody’s Investors Service said Monday, as card issuers remain choosier in their lending practices.

After writing off billions in uncollectible credit card debt over the past few years, banks have started to hand out new cards again. But they are doing so slowly and only lending to those with higher credit scores. Overall, such a large number of borrowers were eliminated from the credit pool that it will take years to replace those accounts, analyst Luisa De Gaetano said in an interview.

In 2009 and 2010, defaults totaled a combined $74.5 billion at just the top six banks that issue credit cards — Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Capital One Financial Corp., American Express Co. and Discover Financial Services, according to Moody’s. That doesn’t take into account smaller banks or retail cards. The default, or charge-off, rate peaked in the second quarter of 2010 at 10.9 percent.

While consumer research firms and an important Federal Reserve banker survey have found that banks are easing lending standards a bit, it remains tough for those with the lowest credit scores to get cards. The riskiest card customers, those individuals who had cards shut down because they couldn’t pay their bills, are unlikely to be able to get new cards in the near future. – Source

The reason this is not optimistic news of growth for debt relief providers is that the underlying extension of sub-prime credit is going to remain limited or grow very slowly.

READ  Demand for Debt Relief Help Sinks & Stinks. Lowest Levels Since 1994.

My opinion is that debt relief providers should focus on tools and efforts to provide services leveraging automated tools, remain focused on limiting operational expenses, cut overhead and prepare to coast through the next 18-24 months on lower income until lenders begin to gain confidence in the economy and lend with more vigor.

For anyone wondering how to obtain the best chance of success in a down debt relief market, you may be interested in the upcoming class, “How to Survive, Thrive & Arrive in the New Debt Relief World” which will offer expertise and instruction on dealing with this difficult marketplace.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • Persons have cottoned on to the detail that things like bankruptcy, while a quick fix, is decisively not worth the long period adverse consequences that it brings. In latest times more and more persons have been rotating to debt consolidation as an effective means to decrease liability.

  • @10989f7460f2358f04630b2442c0892c:disqus

    This is in response to a comment you made below about soon the industry will only have “good guys” and there will not be a need for someone like me to look out for consumers.

    Mike clearly we are going to have to agree to disagree on the point that you think the industry will soon be filled with just good guys only looking out for consumers.

    You fail to understand a key issue that it seems neither you nor Matt care to address.

    The issue is that you can’t serve two masters.  At the end of the day, you have a business to run, and when the interests of the business conflict with the interests of consumers, a choice must be made.

    You can deny it all you want, but the bottom line is that your advice, although potentially offered with the best of intentions will be bias toward how you are paid.

    Consumers will always need an experienced voice on the other side of the coin to keep that in check. 

    I don’t understand why that bothers you if as you say, you only put consumers first.  Then nothing I say should cause you to lose business, but only those companies who do not put consumers first, which is your competition.

    Unless of course, you are aware that you can’t serve two masters and those times when a decision must be made, you would prefer to not have me around to draw attention to it?

  • I get it. I was just saying the pilot example was based on an incorrect assumption. To fly safe we are trained to trust the instruments (data) above all else.

  • Bro, listen, all I’m saying is that when someone or a group of people report something but the evidence just doesn’t support their claim, you have to trust the evidence and make a decision based on ALL aspects. Police do it all the time. Death looks like suicide but after some digging, the evidence points to foul play. After digging a lot more, they uncover a massive conspiracy that ties victim into a much larger situation. Just saying.

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