Securitization backed by debt settlement (DS) fees presents a new and fast-developing ABS subsector, with the first two transactions1 coming to market in Q4 2025. Momentum is building, and KBRA expects additional DS fee securitizations as other debt settlement companies (DSC) look to tap the capital markets. In these transactions, the collateral consists of the rights to DS fees—both earned and unearned—that DSCs generate by negotiating settlements with creditors on behalf of consumers.
Before these inaugural issuances, DS-related securitization activity centered on loans made to consumers enrolled in DS programs (called “acceleration loans”), which were used to fund remaining settlements and associated fees. This KBRA report provides a detailed analysis of DS fees and their distinct credit and operational risk considerations, building on prior KBRA research examining the DS industry’s size, processes, participants, and outcomes (see…