If you have ever received a collection letter from Midland Credit Management, been sued by Midland Funding, or seen either name on your credit history, it may seem like you are dealing with just another debt collector.
You aren’t.
Behind Midland is Encore Capital Group, Inc., a publicly traded international specialty-finance company that buys enormous portfolios of defaulted consumer accounts and then uses a sophisticated combination of digital collection, call centers, data analytics, collection agencies, and litigation to turn those portfolios into cash.
And right now, Midland’s U.S. collection operation is growing rapidly.
The numbers tell the story.
During 2025, Midland Credit Management’s U.S. operations collected approximately $1.95 billion from purchased consumer receivables. That was up from approximately $1.57 billion in 2024 and $1.31 billion in 2023.
Then came 2026.
In the second quarter alone, Midland’s U.S. business generated approximately $572 million in collections, a company record and a 17% increase from the same quarter in 2025. At the same time, MCM purchased approximately $372 million of additional debt portfolios—the largest U.S. purchasing quarter in Encore’s history.
Those numbers matter to consumers.
Because Encore isn’t simply buying more debt.
It is getting better at collecting it.
And one of the company’s significant collection channels remains the legal system.
First: Who Are Encore, Midland Credit Management and Midland Funding?
The names can be confusing.
Encore Capital Group is the publicly traded parent company.
Encore’s principal U.S. business is Midland Credit Management, Inc. and its domestic affiliates, which Encore collectively refers to as “MCM.” Encore describes MCM as a market leader in U.S. portfolio purchasing and recovery.
Consumers may also encounter Midland Funding, frequently as the entity claiming ownership of an account and appearing as plaintiff in a collection lawsuit.
The basic business model starts with purchasing defaulted consumer debt.
Banks and other creditors eventually charge off accounts that consumers have stopped paying. Charge-off does not necessarily eliminate the obligation. Creditors can sell portfolios containing large numbers of these accounts to debt buyers.
Encore purchases defaulted receivables at substantial discounts to their face value and then attempts to collect enough from those portfolios to generate an attractive return.
The key word is portfolio.
Encore isn’t making a collection decision about one credit-card account at a time in the way a small business might chase an unpaid invoice.
It is purchasing and managing enormous pools of consumer obligations.
That makes debt collection a data business.
Midland Has Three Major Ways of Collecting Money
Encore’s financial disclosures divide its collection operation into three major channels:
- Call center and digital collections
- Legal collections
- Collection agencies
The legal channel includes money collected through Encore’s internal legal operation and its network of retained law firms.
This is important.
Litigation isn’t something sitting outside Midland’s normal collection business.
Legal collections are expressly identified as one of the company’s primary collection channels.
And the amount of money coming through that channel is substantial.
Midland Collected $663 Million Through Its Legal Channel in 2025
Look at MCM’s U.S. legal collections:
2023: approximately $526.2 million
2024: approximately $560.7 million
2025: approximately $663.2 million
That means legal collections increased approximately 18% from 2024 to 2025 and approximately 26% from 2023 to 2025.
$663 million is not an incidental part of a collection business.
It demonstrates why litigation deserves attention when trying to understand Midland’s strategy.
Encore is also spending substantial amounts supporting legal collections.
Company-wide cost of legal collections increased from approximately:
$224.3 million in 2023
to
$259.3 million in 2024
to
$315.5 million in 2025.
That is roughly a 41% increase in legal collection costs in two years.
So while PRA Group’s disclosures have recently attracted attention because PRA expressly characterizes increased legal collection spending as an investment designed to generate future collections, Encore’s financial statements reveal their own significant trend.
Legal collection costs are rising, and legal collections themselves are rising.
And 2026 Is Accelerating
The first half of 2026 makes the trend even more interesting.
During the first quarter of 2026, MCM reported approximately $192.4 million in U.S. legal collections, compared with approximately $151.7 million during Q1 2025.
That is an increase of roughly 27%.
Then Midland reported approximately $209.2 million in legal collections during Q2 2026, compared with approximately $166.8 million during the same quarter in 2025.
Put the two quarters together.
MCM generated approximately:
$401.6 million in legal collections during the first six months of 2026
versus
$318.5 million during the first six months of 2025.
That is an increase of approximately 26%.
If you are trying to understand whether legal collection remains important to Midland’s business model, that number answers the question.
It absolutely does.
But Digital Collections Are Growing Even Faster
Here is where Midland’s strategy becomes more interesting than simply saying:
“Debt buyer files lawsuits.”
Encore is simultaneously becoming significantly better at collecting without litigation.
MCM’s U.S. call-center and digital collections increased from approximately:
$783 million in 2023
to
$991 million in 2024
to
$1.27 billion in 2025.
In the first half of 2026, call-center and digital collections reached approximately $722 million, compared with approximately $618 million during the same period in 2025.
Encore has specifically attributed its recent collection performance to factors including new technologies, enhanced digital capabilities and operational innovation.
That gives us a much clearer picture of where modern debt collection is going.
It isn’t:
Digital collection instead of litigation.
It appears to be:
Digital collection plus selective litigation.
Think of Midland’s Operation as a Funnel
Imagine Encore purchases a portfolio containing hundreds of thousands of defaulted accounts.
It would make little economic sense to immediately send every account to a law firm.
Instead, a sophisticated collector can segment accounts and use different strategies.
Some consumers can be reached inexpensively through digital channels.
Some respond to letters.
Some establish payment plans.
Some accept settlement offers.
Some accounts may involve disputes, hardship or other circumstances affecting collection.
Others do not produce voluntary payment.
The company can continuously analyze the remaining accounts and determine which collection strategy appears economically appropriate.
Eventually, selected accounts can move into the legal channel.
That is fundamentally different from an old-fashioned collector simply calling repeatedly until someone finally pays.
It is portfolio optimization.
Why Litigation Can Be So Valuable to a Debt Buyer
A collection lawsuit costs money.
There may be filing fees, service costs, attorney expenses, administrative expenses and compliance costs.
So why spend hundreds of millions of dollars on legal collection operations?
Because a lawsuit can potentially transform the economics of an account.
Before judgment, the collector generally has a claim that the consumer owes money.
After obtaining a valid judgment, the creditor may have access to additional enforcement remedies permitted under state law.
Depending on the jurisdiction and the consumer’s circumstances, those remedies can potentially include wage garnishment, bank attachment, judgment liens or other post-judgment procedures.
Many types of income and assets may be exempt, and state laws differ enormously.
But from the debt buyer’s perspective, a judgment can potentially extend the useful collection life of an account.
That matters enormously when you operate at Midland’s scale.
A Lawsuit Doesn’t Need to Go to Trial to Produce Money
There is another misconception about debt-buyer litigation.
People sometimes assume litigation is profitable only if the collector wins at trial and then garnishes someone’s wages.
Not necessarily.
Filing suit itself can produce payment.
A lawsuit may result in:
settlement,
a lump-sum payment,
a payment arrangement,
a consent judgment,
a default judgment,
or eventually a contested judgment.
In other words, the legal channel can generate collections long before anyone conducts a trial.
And many collection cases are never actually tried.
That is one reason litigation can function efficiently at scale.
Default Judgments Matter
This is also why ignoring a Midland Funding lawsuit can be dangerous.
A lawsuit is not proof that Midland is entitled to judgment.
A debt buyer may still need to establish the elements necessary to prevail under applicable law.
Depending on the case, issues may include:
- ownership of the account;
- standing;
- the amount allegedly owed;
- the applicable contract;
- admissibility of account records;
- statute of limitations;
- identity;
- prior payments or settlements;
- arbitration provisions; and
- compliance with applicable consumer-protection laws.
But defenses usually need to be raised.
If a consumer doesn’t respond to the complaint, Midland may seek a default judgment.
The consumer has then lost the opportunity to contest issues that might have been disputed before judgment.
And judgment can open an entirely different stage of the collection process.
Midland Is Buying More Debt Than Ever
Legal collections are only half of the story.
The other half is inventory.
Encore reported that MCM purchased approximately $372 million of U.S. portfolios in Q2 2026 alone, its largest purchasing quarter ever.
Encore’s Estimated Remaining Collections, or ERC, reached approximately $10.18 billion at June 30, 2026, up approximately 9% from $9.36 billion one year earlier.
ERC should not be confused with the face amount consumers allegedly owe, nor does it mean Encore is guaranteed to collect $10 billion.
It is Encore’s estimate of the future collections expected from its purchased portfolios.
But the figure demonstrates the scale of the collection machine.
There is an enormous amount of debt moving through Encore’s system.
Today’s Debt Purchases May Become Tomorrow’s Lawsuits
This is the part consumers and consumer attorneys should watch carefully.
Record portfolio purchases don’t instantly become record lawsuits.
Newly purchased accounts can first move through Midland’s other collection channels.
Digital communications may begin.
Letters may be sent.
Settlement opportunities may be offered.
Some consumers will voluntarily resolve their accounts.
But some percentage of the remaining accounts can eventually become candidates for legal collection.
Therefore, record purchasing today creates the inventory from which future lawsuits can emerge.
That does not mean every account—or even most accounts—will result in litigation.
Encore does not publicly provide enough information to make that conclusion.
But when a company simultaneously reports:
record U.S. purchasing,
record MCM collections,
rapidly increasing digital collections,
and
26% year-over-year growth in first-half 2026 legal collections,
it is reasonable to conclude that legal recovery remains an important component of the company’s overall collection strategy.
Midland Versus Portfolio Recovery Associates
The comparison with Portfolio Recovery Associates is fascinating.
Both are enormous purchasers of defaulted consumer debt.
Both use sophisticated data and multiple collection channels.
Both generate substantial collections through legal activity.
And both are currently experiencing strong collection growth.
PRA Group has been unusually explicit about its strategy, repeatedly telling investors that increased legal collection spending is intended to support future cash collection growth.
Encore tells the story somewhat differently.
Its disclosures emphasize portfolio purchasing, digital technology, operational innovation and enhanced collection strategies while separately reporting substantial growth in legal collections and legal collection costs.
The destination may be similar even if the investor messaging is different.
Both companies appear to treat legal collection as an economic channel whose performance can be measured and optimized.
This Isn’t Your Grandfather’s Collection Agency
The larger lesson goes beyond Midland.
Modern debt buying increasingly resembles financial engineering.
Buy portfolios at prices expected to generate attractive returns.
Analyze enormous amounts of historical collection data.
Determine which accounts are likely to pay.
Use low-cost digital channels wherever possible.
Allocate human resources where they produce sufficient returns.
Send selected accounts into legal collections.
Measure performance.
Feed the results back into the models.
Then use those models when pricing the next billion dollars of debt.
Encore’s own annual report says its U.S. collection increases have been driven by consistent increases in capital deployment and enhanced collection strategies.
That phrase may sound harmless.
Financially, however, it is enormously important.
A debt buyer that becomes better at collecting each portfolio can afford to buy more portfolios.
More purchasing creates more inventory.
More inventory produces more collections.
And a portion of those collections will come through courts.
What Consumers Should Take From the Numbers
Receiving a Midland letter does not mean you are going to be sued.
Receiving a Midland Funding lawsuit does not mean Midland automatically wins.
But ignoring the account—particularly after litigation has actually been filed—is a poor strategy.
Encore’s financial disclosures demonstrate that legal collections are not an obscure side business.
MCM collected approximately $663 million through its U.S. legal channel in 2025.
It then collected another $401.6 million through that channel in just the first six months of 2026.
That is a collection machine operating at extraordinary scale.
Consumers who receive lawsuits should review them carefully, determine the response deadline, preserve relevant records and consider having an attorney evaluate the claim.
There may be defenses.
There may be arbitration rights.
There may be settlement possibilities.
There may be problems with the evidence.
There may be nothing wrong with the claim at all.
The point is to find out before a judgment is entered, not afterward.
Follow the Money
Encore’s public financial reports provide an unusually useful window into modern debt collection.
In 2023, MCM collected approximately $1.31 billion in the United States.
In 2024, approximately $1.57 billion.
In 2025, approximately $1.95 billion.
Now, in just the first six months of 2026, MCM has already generated approximately $1.13 billion in U.S. collections.
Meanwhile, Encore is buying unprecedented amounts of additional U.S. debt.
Technology is making collection more efficient.
Digital collections are growing rapidly.
And legal collections are growing substantially as well.
That is the real story behind Midland.
It isn’t simply that Midland Funding files collection lawsuits.
It is that litigation operates inside a much larger, increasingly sophisticated system designed to determine how to extract the greatest expected recovery from enormous portfolios of defaulted consumer accounts.
The letter, the email, the online payment offer and the lawsuit aren’t necessarily separate strategies.
They can be different stages of the same strategy.
And Encore’s financial results suggest that strategy is working remarkably well.
For consumers, that makes understanding and responding to Midland collection activity increasingly important.
For consumer attorneys, it makes Encore’s future financial reports worth watching.
And if record portfolio purchases continue feeding a legal collection channel that is already generating hundreds of millions of dollars every year, the most important question may not be whether Midland Funding will continue filing lawsuits.
It may be:
How much larger will the legal collection channel become?
This article is for general educational purposes only and does not constitute legal advice. A collection letter or lawsuit does not establish that a debt is valid or that a debt buyer is entitled to judgment. Defenses, statutes of limitation, arbitration rights, exemptions, garnishment rules and collection procedures vary by state and by individual case. Consumers who have been sued by Midland Funding, Midland Credit Management, Portfolio Recovery Associates or another debt buyer should consider consulting an attorney regarding their specific circumstances.
