As Personal Debt Grows, So Does Collection Industry

Those unpaid bills are big business for debt collectors.

Despite the credit crunch, one Oxford company has raised $24 million from investors this year. And as MPB’s Cari Gervin explains, that money will actually buy more credit – but it’s the kind people aren’t paying.

Security Credit Services likes it when people don’t pay their credit cards.

Ok, that’s not exactly it. But CEO William Alias, Jr., says his debt collection agency really does help people.

“I mean, we’re doing these people a favor. We’re helping them clean up their credit. They bought something, they got 100 cents a dollar for either the goods or the service, and then they defaulted and didn’t pay for it, ok? And we settle a lot of these accounts for 40 or 50 cents on the dollar.”

The Oxford company is one of the top 10 buyers of credit card debt in the country – they’ve got a billion and a half dollars of debt on the books. So the downturn in the economy has meant an upturn in business. But the recession isn’t all good news, Alias says.

“You have a lot more charged off accounts, but you also have a lot more people who can’t pay for those accounts.”

Rich Hroma is the guy who actually supervises all those collection efforts. And he really hates that debt collectors get a bad name.

“The recent economic situation that the country’s in has pretty much demonstrated that we are a credit economy, and that the economy can’t survive without credit. And I look at us as basically, we’re guardians of the credit economy. If we weren’t there, there wouldn’t be any credit, and then we’d be in worse shape than what we’re in now.”

With the money from this latest investment, Security Credit Services will hire 30 to 40 more people. For MPB News, I’m Cari Gervin in Oxford.