What It Is
The debt settlement industry is comprised of companies that offer a debt resolution strategy that allows debtors to reduce the amount they owe in exchange for a lump-sum payment or series of installments to creditor, as well as certain firms that directly support these operations
The debt settlement industry does not include businesses that collect debts, provide credit counseling, promise to repair credit ratings, cash checks, or provide “debt consolidation”
The debt settlement industry experienced robust growth throughout 2022 as consumers, no longer benefiting from COVID stimulus measures, have been forced to navigate significant inflationary pricing pressures and rapid interest rate hikes by the Federal Reserve
Debt settlement volumes have increased dramatically over the last 10 years, following the rollout of the 2011 FTC Regulation which required consumers to agree to a settlement before debt settlement companies could charge a fee
Between 2012 and 2020 enrolled accounts increased by ~230% and total enrolled debt grew from $1.7 billion to $45.2 billion. Average revolving credit card balance in 2022 was $5,910 and total credit card debt in Q1 of 2023 was a record of $986 Billion.
Delinquency rate of all credit card loans from commercial banks in 2021 were 4.80%. Delinquency rate of all credit card loans from commercial banks in Q4 2022 were down to 2.25%