Recoveries against bad loans have become a major source of cash for credit card issuers, and hence an increasingly important factor in the industry’s return to pre-recession loss rates.

This money, once written off as uncollectible, is salvaged through means like court judgments against debtors and sales of claims to collections agencies. But collections are a wasting resource: the massive reservoir of charged-off paper is aging, which will make it harder to make good on these claims. That’s not to mention the intensifying scrutiny of the collections industry from authorities concerned about potentially widespread documentation problems.

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