3 Reasons Why Collection Agencies Might Go out of Business
Collection agencies might be a thing of the past if any of these issues come to fruition. Everyone knows that collection agencies collect bad debt, which has not been paid. Nobody likes receiving a call from a collection agency reminding them that they need to pay money. So, if you want to put collection agencies out of business here is what you should do.
Number 1, do not pay for anything on credit, unless you are able to pay it back immediately with cash. Credit is the lifeline of any collection agency, and if you start paying in cash, you are drying up a collection agencies well. This may be easier said than done for a lot of people, but if you make a budget and are more mindful of your spending, then you can make a difference.
Number 2, hinders on the legal system. Over the years collection agencies have been constrained more and more by laws that do not allow them to use shady debt collection tactics. These are necessary rules, because a lot of businesses would be abusing debtors left and right, and this is called harassment. These laws are necessary, but everyone knows that a justice system can be abused by greedy lawyers. If the legal system changes puts any more pressures on collection agencies, then they might be forced out of business. Keep your eye on this, as this could be the most crippling blow to the debt collection industry.
Number 3, is also contingent on the legal system. There are certain states where collection agencies are able to operate as commercial collection agencies under a consumer license, as long as 51% of their claims are consumer. This is a loop hole that allows consumer collection agencies to pursue commercial claims, where the real money is. It is much more expensive to operate a strictly commercial license, so many collection agencies use a consumer license to go after commercial debt. If this law is changed in any state, then the number of collection agencies could start shrinking.
Any of these 3 changes could make a huge dent on the collection agency industry. Keep your eye on this, whether you are a consumer or a collection agency.