COVID-19 and the Debt Collection Industry
COVID-19 has changed many industries, including debt collection. With remote work and social distancing, traditional methods have become less effective so collectors are having to get creative to engage with debtors.
Digital Self-Service
Before COVID-19 there was already a trend towards digital self-service in debt collection. That trend has accelerated with the increase in remote working. Collectors are now using alternative communication methods like email, SMS and direct voicemail to reach debtors.
Consumer Prefer Digital Communication
The new asynchronous methods are working, consumers like the less invasive nature of digital collections. A recent CFPB survey shows consumers prefer email over traditional phone calls.
Debt Settlement Programs are Growing
The pandemic has also seen a big increase in debt settlement program enrollment. More consumers are educating themselves on settling debts, driven by market stats showing a rise in program participation.
Performance Metrics and Industry Trends
While we can’t measure the performance of digital self-service and debt settlement programs, industry professionals (sellers, buyers, collectors) are telling us these trends are real.
What’s Next: The Future of Debt Collection
As we adjust to the new normal the industry has had to adapt to, these new methods like digital self-service and debt settlement programs have been key to its survival. We’ll see how these trends continue to shape the debt collection industry.