2020 is the best year ever . . . for debt collectors

This has been a year like no other. The pandemic has left more than 200,000 Americans dead and millions more without jobs. Schools sent students home and moved classes online. Businesses closed their doors, many of them permanently shuttered.

Amid the pain, turmoil and financial hardship of the pandemic, business has been booming in one industry: debt collection.

Let the good times roll

At the end of summer, Encore Capital, the nation’s largest debt-buyer announced record earnings, doubling its previous high in a quarter. The company reaped its windfall from Americans who had received CARES Act benefits such as stimulus checks and beefed-up unemployment checks designed to enable people to buy food, keep the lights on and make rent or mortgage payments.

The measure stopped foreclosures and evictions and suspended student loan payments, but it didn’t stop collectors from pursuing credit card debts – Encore’s specialty.

According to a recent report by ProPublica, “people responded to collectors’ calls and letters.”

Raining cash on collectors

The CEO of Encore’s main competitor – Portfolio Recovery Associates – called the set of circumstances created by the pandemic “a perfect storm from a cash perspective.”

Analysts expect both Portfolio Recovery and Encore to enjoy 40 percent earnings growth in 2020.

Less than perfection

However, not everything in 2020 has been “perfect” for collectors.

In September, the Consumer Financial Protection Bureau sued Encore, charging that the company violated a 2015 agreement to resolve claims it had been “pressuring consumers with false statements and churning out lawsuits using robo-signed court documents.”

Another pandemic downside for collectors: many local courts around the nation temporarily shuttered earlier this year, cutting off debt collection lawsuits, another revenue stream for the companies.

ProPublica reports that “after a bit of a lull” in debt collection lawsuits, the companies are again filing thousands of suits per month.

Fighting back

“The same giant debt buyers known for fighting consumer protection laws at every turn have been raking in cash during this pandemic,” said Sen. Elizabeth Warren. “They are now licking their chops in anticipation of profiting even more off families who have their hours further cut or can’t find a job, and can’t keep up with their bills or their mortgage.”

Many Twin Cities residents facing abusive debt collectors or efforts to collect on debts not owed, fight back with experienced legal help.