An interesting article sent in by a tipster (send in your tips here) from Inside ARM reinforces what has been said here about bad debt declining.
The article looks into the vanishing charge off debt and without that debt there is less stimulus for debt relief services.
The article says: “So, I decided to do a little digging. I ended up contacting about 30 industry professionals who work for collection agencies, debt buyers, debt collection law firms, and yes, even credit card issuers, and came up with about 15 different theories but one general answer: all of those post-financial crisis card charge-offs have worked their way through the ARM (accounts receivable management) system.
I still have a hard time rationalizing how so much debt could be worked through the system in such a short period of time, but most of the folks I have talked to believe that credit issuers reduced the amount of time that accounts were outsourced at the earlier stages of delinquency (3-4 months at the prime, mid-prime and second stages vs. historical averages of 4-6 months).
At the same time, creditors were pursuing a more legal collections channel-intensive strategy earlier in the delinquency cycle – not necessarily pursuing judgments immediately, but outsourcing more accounts under a pre-legal strategy. While debt buying activity declined in 2009 due to falling portfolio prices, acquisitions increased in 2010 as prices rose. So, a greater percentage of paper ended up with law firms or debt buyers in a shorter timeframe.
Later stage collection agencies and debt buyers have certainly received a growing amount of business over the past couple of years, but that market cycle seems to have ended, or is in the process of ending, for them as well.” – Source
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