Collector – June 2019 - 20

"You'll start to see more and more placements or
defaults as we're going into a market correction.
When you look at the market now, you're starting to
see those cracks."

THE IMPACT OF A RECESSION
The Great Recession stretched from
December 2007 to June 2009, according
to the National Bureau of Economic
Research. Mike Ginsberg, president and
CEO of Kaulkin Ginsberg, believes it was
the most pervasive and impactful recession
in the history of the ARM industry, which
he considers truly getting established in
the 1940s (i.e., after World War II and the
advent of credit).
"The impact of the Great Recession
punched this industry square in the mouth,"
Ginsberg said, "all facets of it: collections,
debt buyers, collection law firms, vendors
and creditors."
For consumers, unemployment and
default rates went up; for debt collectors,
revenue and liquidation rates went down
as consumers' propensity to pay fell off a
cliff. The collapse of the financial services
market also knocked out agencies that
relied solely on the business generated by
those clients.
During that time, many ARM companies
shut down or were absorbed by larger
operations, and agencies that managed
to weather the storm may have found
their efforts undone by intense regulatory
compliance challenges that sprang up just a
few years later.
The ARM landscape, which had
approximately 7,500 collection agencies
(including debt buyers and law firms) before
the recession, now has closer to 3,500, Lamm
said. And from 2006 to 2016, the number of
collection jobs declined, according to data
from the Bureau of Labor Statistics, despite

20

an initial 23 percent growth projection for
that time period.
The collapse of the housing market in
2008 also shifted the consumer profile,
impacting how collection agencies
approached delinquent debt and how
consumers paid it.
"Many companies had to change their
entire workflows because consumers had
been tapping their home equity lines of
credit to pay down debt," Lamm said.
"When the market changed and home
prices dropped out, that option was gone
and companies had to shift their strategies
from settlement in full to long-term
payment plans. They had to build their
payer base because there was really no other
way to function."
While many ARM companies were
anticipating market changes of some kind,
most didn't predict the magnitude of the
Great Recession. Fortunately, while there
has been a lot of talk about the student loan
and auto "bubbles" today, industry experts
don't think we'll see anything like the Great
Recession this time around.
"If the auto bubble were to burst, it
wouldn't have the same impact because it's
just a different type of asset than mortgages,"
said Jared Lese, director of research for
Kaulkin Ginsberg.
And while the student loan market is
bigger than auto, "what's happening there
is not a recession, it's a market change,"
Ginsberg said. "We're already seeing a
dramatic shift in how those accounts are
being serviced. It's extremely impactful, but I
don't consider it related to a recession."
When should you start preparing for
the next downturn/correction/recession?
"Now," said Heidi Pozzo, founder of Pozzo
Consulting and author of Leading the
High-Performing Company. "It's too late
if you wait until you are in a recession
because the business won't have the
flexibility to adjust quickly."
Analysis from Bain & Company proves
this out. In a study of 3,500 companies that
saw double-digit growth leading up to the
Great Recession, only those that prepared
for a recession continued to thrive both

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Collector – June 2019

Table of Contents for the Digital Edition of Collector – June 2019

President’s Page
Industry News
Best Practices
FYI
Collection Tips
Adapting to a New Environment
“Today agencies realize this is an opportunity to help the consumer.”
ACA International’s 2019 Convention & Expo
Close the Revolving Door
Calendar
Honor Roll
Education Spotlight
Ask the Experts: Small Talk
Growing into the Industry
Exploring STIR/SHAKEN
CFPB Releases Proposed Debt Collection Rule
Industry Advancement Program Helps Member Defeat FDCPA Claim in Ninth Circuit
ACA SearchPoint
Ad Index
Membership
Last Word
Collector – June 2019 - Cover1
Collector – June 2019 - Cover2
Collector – June 2019 - 1
Collector – June 2019 - 2
Collector – June 2019 - 3
Collector – June 2019 - Industry News
Collector – June 2019 - President’s Page
Collector – June 2019 - 6
Collector – June 2019 - 7
Collector – June 2019 - 8
Collector – June 2019 - 9
Collector – June 2019 - Best Practices
Collector – June 2019 - 11
Collector – June 2019 - FYI
Collector – June 2019 - 13
Collector – June 2019 - 14
Collector – June 2019 - 15
Collector – June 2019 - Collection Tips
Collector – June 2019 - 17
Collector – June 2019 - Adapting to a New Environment
Collector – June 2019 - 19
Collector – June 2019 - 20
Collector – June 2019 - 21
Collector – June 2019 - Close the Revolving Door
Collector – June 2019 - “Today agencies realize this is an opportunity to help the consumer.”
Collector – June 2019 - ACA International’s 2019 Convention & Expo
Collector – June 2019 - 25
Collector – June 2019 - 26
Collector – June 2019 - 27
Collector – June 2019 - 28
Collector – June 2019 - 29
Collector – June 2019 - 30
Collector – June 2019 - 31
Collector – June 2019 - 32
Collector – June 2019 - 33
Collector – June 2019 - Calendar
Collector – June 2019 - Honor Roll
Collector – June 2019 - Education Spotlight
Collector – June 2019 - 37
Collector – June 2019 - Ask the Experts: Small Talk
Collector – June 2019 - 39
Collector – June 2019 - Growing into the Industry
Collector – June 2019 - 41
Collector – June 2019 - Exploring STIR/SHAKEN
Collector – June 2019 - 43
Collector – June 2019 - CFPB Releases Proposed Debt Collection Rule
Collector – June 2019 - 45
Collector – June 2019 - Industry Advancement Program Helps Member Defeat FDCPA Claim in Ninth Circuit
Collector – June 2019 - 47
Collector – June 2019 - ACA SearchPoint
Collector – June 2019 - Ad Index
Collector – June 2019 - Membership
Collector – June 2019 - 51
Collector – June 2019 - Last Word
Collector – June 2019 - Cover3
Collector – June 2019 - Cover4
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