Unsecured Debt Brings Relief Companies Big Business

Apr 18, 2018 | Legal

Marketing Blog

Unsecured debt is on the rise again, which leaving many consumers stuck with increasingly higher interest payments every month. Unsecured debt refers to any loan not backed with an underlying asset for collateral, such as your house or vehicle. And while unsecured debt is very common, lenders also carry more risk, which translates to higher interest rates for borrowers. Once borrowers fall behind for six months or longer, that’s typically when debt collectors start calling. And once an account goes to collections, it creates a new business opportunity for consumer credit repair companies.

Unsecured debt examples include:

  • Credit cards
  • Medical bills
  • Phone/Internet bills
  • Personal loans and credit lines extended without a collateral requirement

If a borrower cannot repay the full loan amount, lenders/creditors are forced to sue or resell debt to collection agencies. Then, declaring banktrupcy is the only way borrowers can eliminate any unpaid balances still outstanding on their unsecured debt.

Despite Strong U.S. Economy, Unsecured Debt Keeps Rising

Despite a stronger recent economy, U.S. consumers still rely on unsecured debt to help make ends meet. According to a 2017 study using NY Federal Reserve Bank and U.S. Census Bureau data, unsecured debt isn’t going anywhere. The study, which analyzed almost 127 million U.S. households, shows several major spending categories outpaced income growth over the past decade. For example, up to 27 million American adults now put medical expenses on their credit cards. As a result, today’s average indebted household pays hundreds in credit card interest each year — more than $12 billion total.

Americans’ total credit card debt skyrocketed 2017, reaching an estimated $905 billion nationwide. This number represents a nearly 8% increase over the previous year’s expenditures. The average household with unsecured debt now carries an average $15,654 credit card balance month-to-month.

How Medical Costs Impact Household Debt

More people are using credit cards to pay their medical bills, which grew almost twice as fast as income levels. In fact, medical costs are up 34%, while income rose just 20% in the same 10-year period. In 2016 alone, U.S. health care spending increased 4.3% to reach $3.3 trillion, or $10,348 per person. Out-of-pocket spending for health care grew 3.9% in 2016 to $352.5 billion, rising much faster than 2015’s 2.8% growth rate. This was the fastest growth increase since 2007, and exceeded the 2% annual average growth rate from 2008 to 2015.

This leads to more people paying interest they can’t afford for emergency medical services that they cannot live without.

More Unsecured Debt Creates An Opportunity for Credit Repair Services

These spending trends create a business opportunity for debt relief and credit repair companies. Lenders may not be able to immediately seize an asset whenever a borrower falls behind on loan repayments. Still, that doesn’t mean they do nothing to try and recoup their losses from delinquent borrowers. Some hire aggressive debt collectors to help them resolve past-due accounts. Lenders may also threaten to sue and garnish the borrower’s wages. As a result, vulnerable borrowers turn to debt relief and credit repair companies for ways to help resolve overdue payments.

In 2017, credit reporting agency TransUnion saw greater consumer credit access and rising delinquency trends for card and auto loans. This year, it predicts delinquency rates will rise again as borrowers face the impact of rising interest rates and uncertainty from tax reform and global conflicts. That makes 2018 an ideal time for debt relief providers to get pre-qualified leads from LeadingResponse.

Get Qualified Debt Relief Leads Delivered On Your Terms

Each year, LeadingResponse delivers over one million qualified leads to our clients. We attract and engage with prospects where they already live online: through social media, email campaigns and branded content-based sites. Our digital marketing funnels capture debt type, amount and location information as well as screening each lead to ensure quality.

To help convert more leads into signed clients, we offer the following optional services to every company that partners with us:

  • Free, secure Lead Management System (LMS) software portal. Our LMS is completely optional to use, but companies that do report significantly higher conversion and retention rates. You won’t need to download or install anything to use this customizable tool — all you need is an internet connection. The LMS allows you to customize reports, score lead quality, track shipments and get contracts signed all in one place.
  • US-based call center staff available 24/7 to initiate contacts and process lead conversions. For just a few dollars more, our trained professionals can answer questions, verify debt information and get onboarding documents signed. Our call center agents can help you offload most administrative tasks and spend more time meeting signed clients in person.

Ready to find out what LeadingResponse can do for your business? Contact us with your questions, and the right person will get back to you within one business day.

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