Debt Collection Agencies and the Supply of Consumer Credit
88 Pages Posted: 29 Apr 2020
Date Written: February, 2020
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: creditor rights, law and ﬁnance, contract enforcement, household ﬁnance, consumer credit, debt col-lection
JEL Classification: G20, D18, D12, K35, G18
Suggested Citation: Suggested Citation