Collection Agencies

The 2,557 collection agencies in the US collect and remit payments to clients. Major revenue categories include individual debt collection and commercial debt collection. Other services include factoring accounts receivables, bankruptcy assistance, and collateral recovery. Large firms may also be debt buyers. Companies involved in mortgage collections may also provide lending services.

Uncertainty in Collections

Defaulted receivables are difficult to collect.

Highly Regulated

The collection industry is heavily regulated by federal, state, and local laws.

Sep 16, 2026 - Debt Collectors Step Up Legal Action

• Debt collectors are leaning harder on the courts as more unpaid bills make their way from overdue notices to lawsuits. A Pew Charitable Trusts study cited by The Wall Street Journal found collection suits rose in seven of eight states studied in 2025, with filings in several areas now running above prepandemic levels. Missouri filings nearly doubled from 2019 to more than 121,000, while Texas filings jumped 77% to more than 515,000. There is also simply more debt to chase: US credit-card balances reached $1.25 trillion in the first quarter of 2026, according to the New York Fed. Most suits involve relatively modest amounts, with Pew estimating three-quarters are for less than $4,000. Yet roughly 70% end in default judgments, often because consumers never respond. For collection firms, those judgments can unlock much stronger recovery tools, including wage garnishment, bank-account seizures, and property liens.
• More federal student loan borrowers are falling into default as repayment challenges intensify, creating a growing pool of accounts requiring servicing and recovery. About 9.5 million borrowers are now in default, up from roughly 5.3 million a year earlier, after pandemic-era protections expired and repayment requirements resumed. Although the US Department of Education temporarily delayed involuntary collections such as wage garnishment and Treasury offsets while implementing new repayment programs, borrowers in default continue to face damaged credit and eventual collection actions unless they resolve their loans. At the same time, expanded rehabilitation options and new income-driven repayment plans are giving borrowers additional opportunities to avoid default or return to good standing. For the collection agency industry, the trend points to rising demand for default management, servicing support, and borrower outreach, although federal student loan recovery remains subject to stricter government oversight and compliance standards than traditional private-sector collections.
• US household debt reached a record $18.8 trillion in the first quarter of 2026, according to the Federal Reserve Bank of New York. Student-loan debt totaled about $1.66 trillion, with roughly 11% of balances at least 90 days delinquent, highlighting continued repayment strain for many borrowers. Credit-card balances stood at approximately $1.25 trillion - slightly lower than the previous quarter but still significantly higher than a year earlier - reflecting persistent consumer borrowing and elevated interest rates. Auto loans and other consumer debt also contributed to the overall increase, with auto-loan balances rising to about $1.69 trillion. Despite record debt levels, the New York Fed says most household balance sheets remain relatively stable overall, though younger borrowers and higher-debt households are showing increasing signs of financial stress as elevated interest rates continue to pressure consumers.
• US mortgage debt is at record highs, according to Bankrate, driven by surging home prices and elevated interest rates. The average American mortgage borrower owes $258,214 - up 3.1% from 2024 - while total household debt hit $18.8 trillion in Q4 2025. Mortgages dominate that figure, dwarfing auto loans ($1.67T), student loans ($1.66T), and credit card debt ($1.28T). Millennials carry the heaviest load at $320,027 on average, and 67 cities now see average mortgage balances exceeding $1 million. The Mortgage Bankers Association puts the delinquency rate at 4.26% in Q4 2025, up year-over-year, with Southern states hit hardest. Per the National Association of Realtors, the median home price has climbed from $280,700 in March 2020 to $398,000 as of February 2026, reflecting what's fueling the ongoing debt surge.

Industry size & Structure

The average collection agency operates out of a single location, employs 31 workers, and generates $6.1 million annually.

• The collection agency industry consists of about 2,555 firms that employ 106,185 workers and generate about $15.6 billion annually.
• The industry is concentrated at the top and fragmented at the bottom, with about 75% of companies having less than 20 employees.
• Large companies with debt collection operations include Onity Group (formerly Ocwen Financial), Encore Capital Group, Alorica, iQor, and Portfolio Recovery Associates. Large firms may have operations in foreign countries.
• The census definition of collection agencies excludes debt buyers, although some large agencies also purchase debt. The debt buying market is concentrated.
• The main sources of debt include health care, credit card/financial, utilities/telecommunications, student loans, and commercial and government debt.
• The majority of industry revenue - about 85% - comes from debt collection of individual consumers.