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The Economic Impacts of the Debt Collection Industry

Posted by Tessa Tinley on Oct 05, 2018

The common perception of the debt collection industry in modern times is almost overwhelmingly negative. Collectors in pop culture are often represented as callous, predatory characters who harass poor families and individuals when they're most vulnerable. While a very slim number of collectors may act in this manner, this portrayal is almost entirely false. Debt collection has a significant positive impact on the economy in both a micro and macro sense, and collectors abide by regulations that maintain the dignity of consumers.

Debt collection positive economic impact

Local, State, and Federal Taxes

Like any business, debt collectors pay a variety of local, state, and federal taxes based on their profits. According to a survey from ACA International’s Ernst & Young, the federal government collected $852 million in taxes from the industry in 2016. State and local governments collected $652 million, paying for things like:

  • Transit infrastructure
  • Public utilities
  • Medical care
  • Fire and police

Collection agencies also pay property taxes through their leases or real estate claims, and those taxes go to pay for local schools in their community. Well educated adults are key to the success of all businesses in the community.

Employment and Revenue

Debt collectors improve revenue for companies by recovering delinquent accounts, and this revenue helps these companies maintain, as well as grow their work forces. Money that would otherwise not get collected is injected into the local economy, providing greater opportunities for businesses and workers. Collection agencies also contribute directly to employment through the hiring of agents and other support staff at their offices.

Community Contributions

Debt collectors know that the overall well being of their communities has an effect on their ability to be successful. That's why they are known for giving back to a variety of organizations like food banks and children's hospitals. Debt Collection organizations like ACA International also provide scholarships for college students and disadvantaged children. For collectors, it's not just about taking. Investing in the community is in everyone's best interests.

Debt Relief

Collection efforts are not a zero sum game. A successful collection can benefit both the agency and the individual or family getting out of debt. Collection agents are often able to arrange favorable settlements that allow people to remove negative accounts from their credit reports, empowering them to purchase cars, homes, and other assets. Resolving these accounts frees up money to be spent in the economy where it can improve everyone's economic situation. There is also the personal stress that's achieved from getting out of debt. This is a quality of life improvement that can't be overestimated.


Debt Collection can have a positive effect on the economy. When people are treated with dignity and respect, the are more apt to pay their accounts, giving positive influence to the economy as a whole.  Still not sure if outsourcing collections is for you?  Read our article discussing this more in depth.

Topics: Third Party Collections, debt collection