The Generational Shift in Debt Collection: Is Your Strategy Keeping Up?

According to The Competition for Consumer Payments, a 2026 study by SBT and Datos Insights, younger generations report significantly higher rates of debt in collections than older consumers.

• 39% of older Millennials report debt currently in collections.
• 34% of Gen Z report debt currently in collections.
• 31% of younger Millennials report debt currently in collections.
• 25% of Gen X report debt currently in collections.
• 12% of younger Baby Boomers report debt currently in collections.
• 6% of older Baby Boomers and seniors report debt currently in collections.

Financial hardship follows a similar pattern, with 51% of older Millennials, 48% of Gen Z, 47% of younger Millennials, and 45% of Gen X reporting financial hardship in the past year. That compares with 27% of younger Baby Boomers and just 15% of older Baby Boomers and seniors.

For collection agencies, these findings underscore a critical reality: many consumers managing outstanding debts are also navigating financial pressure and competing payment obligations. And the generations most affected have different expectations for how they engage with businesses.

Gen Z and Millennials have grown accustomed to managing everyday interactions digitally, from banking and shopping to communicating with businesses.

Yet traditional collections experiences often rely on phone calls, mailed notices, and payment processes that require consumers to navigate separate websites or portals.

The disconnect matters.

The same generations reporting higher levels of collections debt are also among the most receptive to text-based payments.

The research found that text-to-pay would make:

• 60% of Gen Z more likely to pay immediately.
• 57% of younger Millennials** more likely to pay immediately.
• 55% of older Millennials** more likely to pay immediately.

Aligning engagement and payment strategies with these consumer behaviors presents an opportunity to make collections more accessible, convenient, and effective.

Making it easier to complete a payment can help collectors turn consumer engagement into action.

The research offers a compelling indication of how digital payments can support that goal.

Among consumers who received debt collection reminders with text-to-pay functionality, 55% reported completing payments directly within the text always or most of the time.

Rather than requiring consumers to move from a notice or reminder to a website, log in, and navigate a payment portal, embedded text payments can shorten the journey from engagement to completed payment.

Solutions like SBT’s TextPay help collection agencies bring communication and payment together, reducing unnecessary steps between a consumer’s decision to pay and the transaction itself.

Modernizing collections is about aligning engagement strategies with the financial realities, expectations, and behaviors of today’s consumers.

The research reveals a meaningful intersection: younger generations are experiencing greater financial pressure and higher rates of debt in collections, while also showing stronger receptivity to digital payment experiences.

For collectors, the opportunity is clear: meet consumers where they are and make the path to payment easier when they’re ready to act.

Explore The Competition for Consumer Payments, the 2026 research study by SBT and Datos Insights, for more insights into consumer payment behavior.

Read the Full Report