Debt collection is a process designed to collect the borrowed amount from any company or a person. Debt collection is when a collection agency takes specific actions to collect past-due debt from the borrowers.
The Debt collection industry analytics provide deep insights into the U.S marketplace for expert debt collection offerings and diligently return money to the U.S economy and ultimately into the pockets of every American household.
So Debt collection agencies return the delinquent debt to the economy, help lower the interest rates, mend credit scores for the people with bad credit scores, and impact and strengthen the overall economy for both small and large businesses by impacting the hiring and wages for millions.
Over the years, the debt collection agency has earned its share of ire and outstanding growth across various verticals, including healthcare, mortgage lending, auto finance, and many others.
In 2018, the market for debt collection was worth $11.5 billion, which has grown to $18.8 billion in 2022.
In this article, we’ll share some shocking debt collection statistics to help you get a glimpse of the current state of debt collection in 2022 and discuss some trends shaping the modern-day debt collection industry to provide an overview of where the debt collection industry stands as we head through 2022 and beyond. Let’s get started!
General Debt Collection Statistics
- 77% of American households have at least one debt in collection.
- An average American household owes $15,000 in credit card debt.
- In 2019, approximately 500,000 new student loans originated, and the total debt became $6.6 billion.
- 28% of Americans have at least one debt in collections, whether in-house or third-party services.
- 52% of all debt collections in the U.S involve medical debts.
- 41% of Americans are under some kind of medical debt.
- In 2022, the consumer debt in the U.S has grown to nearly $16 trillion since the peak of the Great Recession.
- The market size of the debt collection industry in the U.S has grown 2.6% per year between 2017 to 2022.
- Measured by the revenue, the debt collection industry is currently worth around $15 billion, with the prediction of hitting $16.7 billion by 2025.
- Since 2016, the debt collection industry has reported annual growth of 3.1% per year.
- Non-financial businesses in the U.S hold approximately 17.7 trillion in total outstanding debt.
- The average recovery rate is 20%, a 30% decline from a few decades ago.
- On the delinquent debt, the industry averages a 20% collection rate, a decrease from 30% a few decades ago.
1. There are 3,200 debt collection agencies in the U.S
There are an estimated 3,200 debt collection agencies in the U.S with more than $3,500 in individual offices or sites.
An average office generates around $4.1 million in annual receipts. The average debt recovery rate has declined by 30% in the last few decades.
2. 52% of the revenue is captured by the largest debt collection companies
Competition is fierce in the debt collection industry. The big agencies are getting bigger, fueled by acquisitions and greater potential to harness artificial intelligence.
According to a recent report from the New York Federal Reserve, the largest companies in the industry capture 52% of total revenue, which is a 46% increase since 2007. Independent debt collectors capture about 35% of the industry sales.
3. 77% of American households have at least one debt in collection
The household net worth is constantly increasing in the U.S ($141 trillion in 2021), and so is the debt.
The total personal debt in the U.S has hit its all-time high of $14.96 trillion, which means 77% of American households have at least one type of debt in collection.
Of course, this debt could be anything from an unpaid doctor’s bill to an auto loan in dispute.
4. An average household in the U.S holds $15,000 in credit card debt
A recent survey by New York Federal Reserve says that an average household in the U.S holds approximately $15,000 in credit card debt.
There are various parties involved in the collection of credit card debt, such as a creditor, debt buyers, debt collection agencies, and lawyers. The borrower might get sued by a company you don’t even recognize.
5. Total consumer debt in the U.S has grown to $812 billion
In the last three months of 2021, there has been a record increase in U.S household debt in 14 years.
The consumer debt increased up to $333 billion in the fourth quarter of 2021, which is 2.2% higher than the third quarter of 2021 and the biggest increase since 2007. The total consumer debt now stands at $812 billion.
6. Unpaid Medical Debt is the largest cause of bankruptcy in America
According to the National Consumer Law Center (NCLC), medical debt is the largest cause of bankruptcy in the United States, and over half of the debtors have medical debt listed as a part of their bankruptcy filings.
More than 20% of the households in the U.S are paying off some medical debt.
7. In the U.S.A, College graduates finish their studies with a school loan debt of about $29,000
The fact that is more shocking than this statistic is that nearly half of those college graduates passed out of college with a student debt of about $29,000.
Laws do not allow the reimbursement of these loans to exceed about 10% of a student’s unrestricted income.
However, a missed payment will beat the credit reports causing low credit scores for defaulter payees.
8. The average amount of debt per case in collections is $366
At its median, the majority of debt in collections on average is about $366. Pay special attention to how much the average debt collection amount is while choosing a debt collection agency.
If an agency has a small number of debt collections lined up, it can tackle a lot more cases.
9. There is a 20% recovery rate on all debt
According to the latest debt collection statistics, there is a 20% recovery rate in all debt. Some debt collection agencies have a higher recovery rate while others may have a lower recovery rate.
Most insiders believe that the myriad of collection rules imposed by many states is the leading cause of declining debt recovery rates.
In addition, the nature of debt has changed. Most people are under student or medical debt, both of which are substantial, and borrowers don’t have the assets to repay the debts on time.
10. Financial services have the biggest debt collection of up to 37%
According to CFP Bureau, the biggest collection industries by revenue in 2019 include financial services (37%), telecommunications (20%), healthcare (11%), retail and commercial (10%), government (9%), and others (13%).
11. 82,700 complaints were filed against debt collectors in 2020
According to CFP Bureau, there is a 10% increment in the number of complaints filed against debt collectors.
From January through December 31, 2020, CFP Bureau has received approximately 82,700 complaints from consumers, a 10% increase from the complaints launched in 2019.
Most complaints were against the debt collectors trying to collect the debts not owed, false representations, written notifications on debt, and threats to take legal action against consumers.
12. Consumer Protection Bureau received more complaints about debt collection agencies than any other service
Every agency of debt collection is not the same. It is clear that some agencies cross the limits and are too aggressive in getting hold of a debtor in this case.
The Consumer Protection Bureau has received the highest number of complaints than any other debt collection service. Interestingly, one-third of complaints come from the age group of 62 and above.
13. 49% of borrows complaint against the attempts to collect the debt not owed
Sometimes debt collection agencies try to collect money from those who do not owe any debt.
In 2020, CFPB received many complaints, of which 49% said that the debt they were forced to pay was not theirs, 29% said that the debt came from identity theft, 19% reported they have already paid off the debt, while 3% said that their debt was discharged in bankruptcy.
14. 10% of borrowers complaint about false statements or representations
Sometimes debt collection companies try to collect the debt without verifying the debt. 10% of the borrowers filed a complaint against false statements or representations, of which 77% said that collectors tried to collect the wrong amount, 16% said that collectors act like an official from a government or law enforcement agency, 5% reported that collectors implied that they are committing a serious crime by not paying their debt, while 2% said that collectors suggest them to not respond to a lawsuit.
15. U.S debt collection Industry is currently worth $15 billion
Market data estimates that the debt collection industry in the U.S currently worth $15 billion.
It is one of the least affected industries during the pandemic, since the consumers cut spending, and received enhanced stimulus benefits, more employment benefits, and more cash to settle their debts.
The U.S collection industry’s revenue grew up to $14.99 billion in 2020 and is expected to reach $16.7 billion by 2025.
What Happens When Your Debt Goes to a Collection Agency?
How To Settle Debt With Debt Collectors and Collection Agencies?
If you owe a debt and are getting calls from a debt collection agency, then you should try to pay them off before they sue you.
In this article, we shared the current growth of debt collection agencies, and we hope this helped in answering your questions.
What is the rate of success of debt collection agencies?
On the basis of the actual amounts collected, the success rate of debt collection agencies is 38%.
What is the number of Americans who are debt free?
According to an Experian study, only 25% of households in America are debt free.
Can a debt collector force you to pay?
Yes, a debt collector can force you to pay, but first, they will need to sue you by getting a court order- called garnishment- that states that they can take money from your paycheck.
Amit Gupta is the founder of National Planning Cycles, a company that helps startups, individuals, and small businesses with their financial planning. He has a vast amount of experience in the finance sector, having managed Google Play accounts for some of the world’s most successful unicorns. Amit is an expert in his field, and he uses his knowledge to help others achieve their individual goals.