Debt Collection Industry Statistics

Debt collection industry statistics offer a deep insight into the U.S. market for professional debt collection services. Understanding how the collections industry has been affected by recent events can enable businesses to grasp how effective these services are. We’ll cover some of the major collections statistics to see where the industry stands and explore the trends shaping modern-day debt collection.

Debt Collection Industry Statistics

Let’s first examine the state of the industry today. The following industry collections stats have been provided by IBIS World:

• Industry Size – The debt collections industry is worth $18.6 billion in 2021.
• Market Growth – The collections market is expected to grow 4.4% in 2021.
• Year–on-Year Growth – Since 2016, the debt collection industry has reported annual growth rates of 3.1% per year.
• Growth Comparisons – On average, collections have grown faster than the pace of the economy.

Considering the fact that in 2018 the debt collection market was worth just $11.5 billion, the collection industry as a whole has demonstrated tremendous growth in the last few years.

What Debt Collection Industry Statistics Show Us

One thing is clear from these statistics: there’s been a huge demand for debt collection services in recent years. This is only reinforced by yet another statistic: approximately 28% of Americans have at least one debt in collections. Figures like these are driving much of the growth within the industry. But where is the growth coming from, with regards to consumer debt? Here are the top three sources of debt:

• Credit Card Debt – The average U.S. household debt in the U.S. from credit cards is $15,000.
• Student Loans – Graduates are amassing debt in huge numbers. In 2019 alone, almost 500,000 new student loans were originated, marking a total of $6,6 billion borrowed.
• Medical Bills – Did you know that 52% of all debt collections involve medical debts? This is because 41% of working Americans are paying off a medical debt of some kind.

Mass spending on credit cards, increasing student tuition costs, and the continuing lack of affordable healthcare are pumping up debt delinquency and forcing more people into collections. With these debt collection statistics, the industry will likely experience continued growth for the foreseeable future. But what trends in collections are sweeping the industry right now?

Trends in the Debt Collection Industry

The leading event in the collection industry is the COVID-19 pandemic. Shutdowns have meant that debt collection has ground to a halt in many states, as the industry isn’t considered an essential service. Likewise, certain states have prevented foreclosures and evictions for several months. While there have been several executive orders and court orders essentially forcing the business to take involuntary time off, this does not tell the full story.

It’s no secret that debt is rising within the average household. Due to the mass loss of jobs and businesses taking on additional credit just to survive, it would be a surprise if the industry was not one of the fastest to bounce back. Unfortunately, there are no statistics yet showing the effect of the pandemic on both consumer debt and the collections business. It will likely take years for the full story to be told. Due to how quickly the pandemic has upended every industry in the country, any previous trends indicated by debt collection industry statistics should be taken with a grain of salt. We won’t know more until more recent data arises.

What should be clear, however, is that bad debt percentage by industry is likely to increase substantially as a result of the pandemic. According to Deloitte, nonfinancial businesses in the U.S. now hold $17.7 trillion in total outstanding debt.

Debt Collection Recovery Rates

On average, the debt collection statistics show a 20% recovery rate on all debt. Some agencies will have a higher recovery rate, whereas others will have a lower recovery rate. The average recovery rate has actually declined from 30% just a few decades before. Most insiders believe that since many states have tightened their rules on collections, it’s made it more difficult for collections agents to recover debts.

Also, the nature of debt has changed. Increasing student loans and medical debt have played a huge role in recovery rates. These debts tend to be substantial, and so many of those who go into collections typically don’t have the means or the assets to fully repay the debt. When less money is recovered, this drives down overall recovery rates. It can be argued that with the myriad of rules and regulations, debt collectors have never been more professional, but this has done little to reduce individual recovery rates.

Conclusion

Insights into the industry illustrate that pre-pandemic, the debt collections business was experiencing a period of consistent growth. But on the other hand, the pandemic has made it difficult for professional collectors to do their jobs. Only time will tell how quickly the industry will recover. If you’re struggling to recover a debt, contact the Collections Bureau of America today and leave it in the hands of the experts. Enjoying this piece of content? dive a little bit deeper on the topic of Commercial Collection Agency.