Third-party collection agencies might strike fear in debt-plagued consumers, but a new finding showed that the $36.2 million collectors recovered in 2010 not only helped bolster the state economy, but also resulted in more jobs and more tax revenue.
"Our nation was built on the premise that those who provide credit, goods and services to consumers have the expectation of being repaid," said Patrick J. Morris, CEO of ACA International, a trade association for professional businesses and individuals in the credit and collection industry.
"Recovering these debts helps organizations survive; prevents layoffs; keeps cost down and credit, goods and services available; and reduces the need for tax increases to cover government budget shortfalls."
ACA International, which commissioned global advisory firm Ernst & Young LLP to do the study, said just under $55 billion was recovered in the U.S. in 2010 on behalf of creditor clients.
PAYING UP
Debt recovered by third-party collection agencies in 2010:
| STATE |
RECOVERED DEBT |
| 1. Texas |
$5.33 billion |
| 2. New York |
$5.31 billion |
| 3. California |
$4.40 billion |
| 4. Florida |
$2.84 billion |
| 5. Illinois |
$2.66 billion |
| 48. Hawaii |
$36.2 million |
| U.S. |
$54.88 billion |
Source: Ernst & Young LLP |
Texas had the greatest amount recovered by third-party collection agencies at $5.33 billon, just ahead of New York with $5.31 billion. Hawaii ranked 48th out of the 50 states and Washington, D.C., which was last at $1.6 million.
The findings that were released Monday also found that Hawaii collection agencies:
» Directly employed 117 people with a payroll of $4 million.
» Indirectly influenced 220 jobs in Hawaii with a payroll of $7 million.
» Paid — along with their employees — $400,000 in state and local taxes and $300,000 in federal taxes.
» Contributed $90,000 and 700 volunteer hours to charitable causes.
"These findings reinforce the critical role the third-party debt collection industry plays as a service provider in recovering unpaid consumer debt on behalf of the public, private and nonprofit sectors," said Hawaiian Collectors Association President Kevin Shiinoki. "Moreover, third-party collectors are actively engaged in Hawaii communities as employers, volunteers, philanthropists and taxpayers."
Nationally, health care represented more than half of the recovered debt at 52.2 percent. That was followed by credit card/financial, 20 percent; utility/telecom, 7.5 percent; student loan, 5.7 percent; commercial, 3.4 percent; government, 2.1 percent; and other, 9.1 percent.
