Since the start of the recession in 2008, credit card delinquencies have increased 40%. Credit card charge-offs went from $40 billion in 2007 to $75 billion in 2009. Moreover, while the economy shows signs of recovery, the US unemployment rate exceeded 10% in the last quarter of 2009, and economists predict that delinquencies and charge-offs will remain high through 2012. Just as an increasing volume of delinquencies is flowing into collections and recovery queues, institutions are facing hiring freezes and staff cuts—meaning fewer collectors to deal with that volume. The competitive environment has become more intense, as other institutions are collecting on the same delinquent borrowers. Who stands to get paid first—or at all?
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