April 15 was a good day for the collection industry, after all. In fact, it may have been the best day at many agencies across the country, according to data released yesterday by TrueAccord.
Normally, April 15 is the deadline for individuals to file their federal income tax returns with the Internal Revenue Service. Traditionally, individuals have used their tax refunds to help them pay down debt. After the coronavirus pandemic struck the United States, the IRS pushed the tax filing deadline to July 15. But after the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law, individuals started receiving stimulus checks from the federal government to help get them through the pandemic. The first wave of payments were deposited into individuals’ accounts on April 15, and many of those people rushed to make payments on their debts, according to TrueAccord’s analysis.
The amount of money that was paid on April 15 was 25% higher than the previous tax season one-day record, according to TrueAccord, and the rate of lump sum payments was 50% higher than the same period last year.
Those elevated payment trends continued through the end of June compared with the typical payment rate in previous years, according to TrueAccord. Even the payment failure rate was significantly lower during the initial months of the pandemic, about 35% lower than last year. The payment failure rate did start to increase in May and was still rising in June, but was well below last year’s rate.
Whether this trend will continue as the nation continues to deal with the pandemic remains to be seen. There is talk of a second stimulus payment and many individuals who lost their jobs have been re-hired, but the economy is still not anywhere close to being on solid footing yet.