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The Success and Failure of Counseling Agency Debt Repayment Plans

Author

Listed:
  • Daniel T Brown

    (Center for Applied Demography & Survey Research, University of Delaware, 290 Graham Hall, Newark, Delaware 19716, USA.)

  • Charles R Link

    (Department of Economics, University of Delaware, 408 Purnell Hall, Newark, Delaware 19716, USA.)

  • Michael E Staten

    (Retailing and Consumer Sciences, University of Arizona, McClelland Park Room 425G, 650 N, Park Ave, Tucson, Arizona 85721, USA.)

Abstract

This paper investigates whether success on a counseling agency-administered Debt Management Plan (DMP), as measured by the amount of original debt repaid, can be predicted at the time of counseling based on observable client and debt attributes. The paper utilizes a unique database of over 17,000 consumers who were counseled and recommended for a DMP by a large non-profit credit counseling agency during 2003. Of particular interest to counseling agencies and creditors is the finding that the magnitude of the interest rate reduction offered by creditors to consumers on a DMP has a significant, positive influence on debt repayment.

Suggested Citation

  • Daniel T Brown & Charles R Link & Michael E Staten, 2012. "The Success and Failure of Counseling Agency Debt Repayment Plans," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 38(1), pages 99-117.
    • Handle: RePEc:pal:easeco:v:38:y:2012:i:1:p:99-117
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    Cited by:

    1. Craig Gundersen & David R. Just & Cäzilia Loibl & Anastasia Snyder & Travis Mountain, 2017. "Connecting Saving and Food Security: Evidence from an Asset-Building Program for Families in Poverty," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(3), pages 659-681, November.
    2. Celsi, Mary Wolfinbarger & Nelson, Russel P. & Dellande, Stephanie & Gilly, Mary C., 2017. "Temptation's itch: Mindlessness, acceptance, and mindfulness in a debt management program," Journal of Business Research, Elsevier, vol. 77(C), pages 81-94.

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