Executive Summary
Robert Manning, director of the center for consumer financial services at the Rochester Institute of Technology, introduces the concept of Responsible Debt Relief (RDF). RDR is an algorithm that statistically estimates the net return to creditors and guides consumers to the debt reduction plan that best matches their financial situation. Dr. Manning is one of the country’s leading experts on America’s ever expanding debt phenomenon.
What is the research about?
This research brief introduces a new idea called Responsible Debt Relief (RDF). The Responsible Debt Relief algorithm is an objective grading system for identifying appropriate debt management programs. The key to a successful RDR system is the objective and statistically precise estimate of consumer debt capacity and debt repayment capability. This report explores the key components of the RDR algorithm and the implication for lenders and borrowers.
What are the credit union implications?
With strict program qualifying criteria and a shorter repayment schedule, lenders/creditors will benefit from the RDR grading algorithm by not wasting resources on debtors who will eventually file for consumer bankruptcy or can only repay a small proportion of their outstanding consumer debt. As the ranks of the near- bankrupt continue to swell along with soaring levels of unsecured debt, the objective algorithmic estimate of consumer debt capacity will become an essential tool in recalibrating the balance between profitable consumer lending and responsible consumer debt relief.