Feerick Center for Social Justice Deputy Director Karuna Patel wrote an article, published in the University of Pennsylvania School of Law’s Regulatory Review, discussing the costs of credit and debt collection.
The costs of credit and debt collection, which are inextricably linked, are frequent battlegrounds for consumer financial products and services regulation.
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Debt collection through the courts has become rather ubiquitous. From 1993 to 2013, the number of debt collections actions filed nationally more than doubled—totaling an estimated 4 million. It likely has continued to rise. As of 2020, the debt collection industry consisted of over 7,000 agencies with $13 billion in revenue.
In this context, reforming pre- and post-judgment interest rates for consumer debt collection actions could make a real difference in the consumer financial services regulatory landscape. State legislators have the power to implement these reforms, and there are compelling reasons for more states to take bold action.