New ACA White Paper Released: The Role of Third-Party Debt Collection in the U.S. Economy

The white paper examines the ways in which debt collectors help consumers and the overall economy.

ACA International released a new white paper Tuesday, “The Role of Third-Party Debt Collection in the U.S. Economy,” exploring the industry’s role in the U.S. economy and focusing on how third-party collectors work in tandem with creditors to positively influence creditor – and consumer – behavior.

The white paper, part of a new research initiative that aims to collect original and meaningful data about the credit and collection industry, shows conclusively that consumers, creditors and the economy as a whole benefit greatly from a robust debt collection industry.

Debt collectors can help consumers with a payment resolution plan that works best for them. “There is often the opportunity to negotiate the total outstanding balance, pay a discounted price on the initial balance, or develop a payment plan with the debt collector as a mediator,” the white paper states.

As a result of this help, third-party collection agencies returned nearly $45 billion to the U.S. economy in 2013. That translates to an average savings of $389 for every household because they didn’t have to pay more for goods and services to offset other consumers’ debts.

The debt collection industry also supports consumers by sustaining an environment where lenders can make credit available and affordable to more people. Lenders decide to make credit available based on a risk calculation that factors in a consumer’s ability to repay; if creditors deem a consumer “high risk,” they may charge prohibitively high interest rates or deny that person credit altogether. But working with third-party debt collectors “provides a degree of security for lenders and a mechanism for them to mitigate losses,” according to the white paper.

“The credit-based economy as we know it could not exist without third-party debt collectors,” said ACA International CEO Pat Morris. “Debt collectors act as a crucial bridge between creditors and consumers, helping consumers take control of their finances and helping ensure that creditors can provide more credit to the people who need it.”