“Seasons greetings,” says a holiday card that will no doubt bring its Brazilian recipients more relief than cheer.

“As you’ve changed the direction of your life and managed to pay down old debts, we wish you a 2012 that is full of conquests,” Recovery do Brasil, a Brazilian debt-collection agency, intones in an email to customers who have paid up.

Brazil’s banks have been on a lending boom in recent years, as relatively steady economic growth has led to record low unemployment and rising salaries. As the volume of loans has increased, so, too, have bad loans. That has meant plenty of new opportunities for debt collection, which for the first time is starting to become big business in Brazil.

Call the rise of debt collection the price of growth. Years of economic instability and hyperinflation kept lending to consumers at a very low rate. But in less than 10 years, the volume of credit in Brazil has almost doubled, and now accounts for nearly 50% of gross domestic product. Total loans reached 2 trillion Brazilian reais ($1.1 trillion) in November, according to the central bank. And 5.6% of the total, or around 112 billion reais, was more than 90 days past due.

The rapid growth has led to some concerns there may be a credit bubble in Brazil, particularly in consumer lending, where the default rate is far higher than it is for corporate loans. Default rates for individual borrowers rose to 7.3% in November, while for businesses the rate was 4%.

Even without any overheating, opportunity abounds for bad-loan collection firms.

Salvatore Milanese, a partner at accounting firm KPMG, said loan growth in Brazil “isn’t worrisome right now, but the nonperforming loan rate is deteriorating in some areas, mainly among consumers.”

According to KPMG, overall bad debts in Brazil may be as much as 330 billion reais, and of that total, banks have already determined they won’t recover about 180 billion reais, potentially making them available for sale to debt collectors.

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