First quarter collections of the major debt buyers appear to be strong. This is to be expected as the first quarter is tax season. As individual debtors begin to receive their refund checks they can use part of it to pay down their debt.
In the past it has been common for customers to pay off their debt due to moral obligation. Their intent was never to steal the money so once circumstances allowed, they felt compelled to do the right thing. But an interesting shift is taking place…
Bank underwriting requirements have changed dramatically over the last several months. With unresolved charge offs still showing up on credit reports, customers are having a difficult time acquiring any type of credit. The new motivation appears to be that in order to obtain financing to purchase new goods or services, consumers need to clean up their credit and that starts with clearing charge-offs from their record.
This shift in thinking adds another strong reason for customer debtors to pay off their debts. The more reasons we can add, the more likely it is that our collections will improve.