Consumer debt has grown more than 8% over 2021 to reach the highest levels yet, due to a combination of higher inflation, robust consumer demand and high interest rates. According to the Q3 Quarterly Report on Household Debt and Credit, total household debt reached $15.3 trillion at the end of Q3 2022. ¹
Higher debt means higher delinquencies from credit cards, mortgages, auto loans and medical debt. For example, the 30-day delinquency rate for consumer credit card payments has risen from 1.85% to 2.08% in Q3 2022, making four straight quarters of increases. ²
Increased delinquencies mean more placement opportunities for collections agencies. Sounds like good news, but is it? Increased opportunity means increased demand for agents, yet according to a recent TransUnion study, 93% of respondents found hiring and retaining talent in the collections industry challenging, and 79% stated that hiring is much harder today than it was two years ago. ³
To capitalize on the opportunity, collection firms are looking to increase their reliance on automation, digital channels, and self-service solutions. Texting has surpassed email and voice to become the preferred consumer communication channel, and must be a key part of any digital communication strategy. Engaging consumers via text can help mitigate talent and recruiting challenges, improve operating efficiencies, and adhere to compliance regulations.