Bad Debt Estimates: Kaulkin Report 2022 Edition Selections

Kaulkin Ginsberg believes that every accounts receivable management (ARM) executive should be armed with an acute understanding of the industry in which they operate, from its long history to the latest trends and developments. To that end, we have put together an aggregation of our most up-to-date collection agency research in the form of the Kaulkin Report, 2022 Edition. The following blog is an excerpt from the “Operational & Technological Trends” chapter. To request a copy of the full Kaulkin Report 2022 – or any of our Kaulkin Sub-Reports – please contact us here or email

To gain a better understanding of potential business opportunities – placements – available to ARM firms, Kaulkin Ginsberg estimated the level of bad debt (i.e., debt that creditors deem “uncollectible”) in various relevant market sectors from 2000 to 2020, shown in Figure 1. Importantly, bad debt represents only potential collection opportunities. After all, there is no guarantee that creditors will choose to outsource collection to ARM companies or that borrowers would even be able to repay their severely delinquent debts.

Figure 1. Estimates of Bad Debt, by Market Segment

Source: Kaulkin Ginsberg, American Hospital Association, Census Bureau, Federal Deposit Insurance Corporation, Federal Reserve Bank of New York, IBISWorld, National Credit Union Administration, U.S. Treasury Department, & Various Annual Financial Reports

After bottoming out in 2014, total bad debt gradually ascended to $480 billion in 2019, indicating that ARM-related opportunities increased as well. In 2020, bad debt drastically declined to $400 billion – a decrease of 16.7% from the previous year – thereby indicating a resultant drop in placement levels. This was mostly driven by a 39.9% drop in student loan bad debt – to $100.3 billion – which was brought about by CARES Act forbearance measures that allowed a significant portion of federal student loan borrowers to avoid delinquency.

Other market sectors saw either a much less severe decrease, relatively, or even an increase in bad debt. Non-Education Federal Government bad debt – which include overdue taxes and Medicare overpayments, among other obligations – declined by 6.2% in 2020, to $150.4 billion. Financial service bad debt rose slightly to $76.8 billion, an increase of 1.1%. Healthcare bad debt owned by hospitals and physicians, meanwhile, dropped by 11% to $61.7 billion. Utilities bad debt doubled from $2.5 billion in 2019 to $5.2 billion in 2020, while cable & telecommunications bad debt fell to $3.4 billion, a change of 2.4%.

Overall, total bad debt – and therefore placements – most likely declined further in 2021, driven by the impact of government stimulus and ongoing concerns regarding the COVID-19 pandemic. In 2022, bad debt could rise as COVID-19’s transition from pandemic to endemic drives increased credit demand and the expiration of various stimulus benefits make it harder for consumers to repay their obligations on time.

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