Debt Collection Agencies and the Supply of Consumer Credit
88 Pages Posted: 29 Apr 2020
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Debt Collection Agencies and the Supply of Consumer Credit
Date Written: February, 2020
Abstract
This paper finds that stricter laws regulating third-party debt collection reduce the number of third-party debt collectors, lower the recovery rates on delinquent credit card loans, and lead to a modest decrease in the openings of new revolving lines of credit. Further, stricter third-party debt collection laws are associated with fewer consumer lawsuits against third-party debt collectors but not with a reduction in the overall number of consumer complaints. Overall, stricter third-party debt collection laws appear to restrict access to new revolving credit but have an ambiguous effect on the nonpecuniary costs that the debt collection process imposes on borrowers.
Keywords: household finance, consumer credit, creditor rights, contract enforcement, debt collection, law and finance
JEL Classification: D12, D18, G18, G20, K35
Suggested Citation: Suggested Citation