Where are you getting your claims about the recovery rate on these debts?
>Most here also do not note that the balances here are also, by design, small as well.
Can you explain how you think that relates to this discussion? If the debt is small, wouldn't that imply that the person was more likely to pay it off, at least in part?
My claims on recovery rates of debt are based on my experience in the banking industry. There are many public sources of information on this topic that you can refer to with respect to expected recovery rates of debts based on age. Provisions for these loses are written into regulations (national and international ones like Basel II/III).
Small overdue amounts are very expensive to recover, if a letter costs you $1 and a phone call $1.50 you don't need very many contact attempts to make an overdue loan of $80 worth less than the cost to recover it, you certainly can not afford to send a lawyer after someone. (Again, this is from my experience related to debt collection work.)
Ok you're probably right on the cost of the writeoff, and now I see your point on the size of the debts I agree with that too. Given this, the program isn't really that unique. For example, the US has a program to help out people with high mortgage debt or underwater mortgages.
>Most here also do not note that the balances here are also, by design, small as well. Can you explain how you think that relates to this discussion? If the debt is small, wouldn't that imply that the person was more likely to pay it off, at least in part?