A rise in the level of bad debts due to an economic downturn is no licence to make money for debt collectors, and the reverse may well be true.Or so Tony Aveling, managing director of Collection House, argued in his presentation to the annual meeting of the company in Brisbane on Friday.Aveling warned shareholders that rising unemployment meant that delinquent debtors would struggle to repay their ageing debts that Collection House collected (usually having bought the debt from the lender, though sometimes on a commission basis).While Aveling did not forecast a decline in profit - given improvements in productivity and more rigorous pricing of newly purchased debt - he implied that profits may be static, and may indeed fall.Aveling noted that the unemployment rate may rise to six per cent or worse and said there was "a real squeeze on our customers".He said this sharply deteriorating environment was staring to "impact … the people we have to contact."How serious this will be is impossible to judge but it will increasingly affect the company's results."Aveling said that "I fully expect profits to trend down over coming months [but] we are doing our best to offset this."He said the firm had some success in the first quarter. He also said the contingent collections business was showing "positive signs".Some of the rivals of Collection House may see the outlook differently. Aveling said there were one or two competitors (and rival purchases of debt ledgers from lenders) "who remain in a state of optimism over the future and, or, their ability to collect and this is arguably keeping prices too high."