Jumat, 27 April 2012

Total debt chased by collectors up by £6bn to £58bn

Total debt chased by collectors up by £6bn to £58bn

By Sean Poulter

PUBLISHED: 02:03 EST, 27 April 2012 | UPDATED: 07:47 EST, 27 April 2012


Debt collection agencies are chasing a staggering £58billion â€" equivalent to £1,000 for every man, woman and child in the country.

The total has shot up by £6billion in just six months and demonstrates how ordinary Britons are unable to keep up with repayments on loans, credit cards and other finance.

The figures make clear that a huge ‘debt bounty’ has been placed on the heads of thousands of individuals at a time when the economy is in double-dip recession.

Loan sharks are making a killing

Making a killing: Loan collection agencies are making a fortune from the growing household debts being run up during hard economic times

Some collection agencies involved have a reputation for being heavy-handed and threatening, bombarding people with teleph one calls, letters and visits at home and work. In some cases, agencies are sending debtors photos of their own homes as a way of frightening them into paying up.

Huge fees are often added to the original debt, making repayments even more difficult.

This is the first time details of the number and value of unpaid debts has been published in a study by the Credit Services  Association (CSA), the national body for the UK debt collection industry.

The figures are a measure of the consumer debt passed to Debt Collection Agencies (DCAs) or sold to Debt Buyers, which specialise in buying personal debt cheaply and then pursuing the individuals to pay up.

The association said 32million debts were being pursued, an increase of 4million in the past six months.

The growth in so-called payday loan firms, which offer short-term loans at high rates of interest, is one reason for the rise in people being chased for debts.

The CSA said local councils, government departments and agencies were also taking a more aggressive approach by employing private debt collection agencies.

Credit cards

Card sharp: Borrowers are advised to cancel old unused cards

Money Advice Trust chief executive Joanna Elson said: ‘These figures make it clear that individuals across the UK owe a huge amount of money that they are struggling to repay.

‘The sharp rise over the past six months is likely to be a result of household budgets being squeezed and credit repayments falling by the wayside.

‘We have seen just this week that the UK economy has returned to technical recession, but the reality for many people is that the recession never really went away at all, meaning they have been struggling to make ends meet for the past few years.’

Miss Elson said some debt collectors did harass those with money troubles.

‘Our advisers at National Debtline hear of lots of cases where individuals are unduly and unethically harassed for money they owe,’ she said. ‘There are many tactics we have seen from debt collection agencies over the years which fall beyond what is allowed.’

The Consumer Credit Counsellin g Service, which offers free advice to those with money troubles, described the increase in the scale of debts being chased as ‘huge’.

‘This points to a wave of problem debt that is drowning many families,’ it said. ‘We are not surprised as our research has identified 6.2million households as “financially vulnerable”.

‘We still see examples of unethical practices, such as debt collectors pretending to have more powers than they do and using intimidating tactics such as sending pictures of a debtor’s home to them.’

CSA president Sara de Tute insisted agencies treated those in debt fairly.

Miss de Tute said: ‘We recognise fully that engaging with customers and treating them fairly brings the best outcomes for all concerned, and that is reflected in the increase in collection rates.’

 

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I note this; "Some collection agencies involved have a reputation for being heavy-handed and threatening, bombarding people with telephone calls, letters and visits at home and work... sending debtors photos of their own homes as a way of frightening them into paying up." Um, why would they be doing all that then? Why not simply take them to court? I'd say the answer is often that these so-called debts aren't debts at all, they aren't in any way enforcable and if the debt collectors went anywhere near a court they'd get laughed out of it. That's why you get all this harrassment. For instance, if a debt's been sold, it's been cleared, hasn't it? The debt's now between the seller of the debt and the buyer, who is a third party to the original 'borrower'. Borrower and third party have no contract so there's no debt to be enforced in a court. I suspect this is why debt collectors won't go near one and instead resort to harrassment.

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We've been here before,Too many Payday shops chasing too much bad custom and not enough checks.A microcosm of the credit crunch.I wonder if Vince saw it coming.

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As advised by ballsup and millipede "if you are in debt which you cannot afford to pay back, borrow more" it really is that simple.

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SUPER PEASANT, 27/4/2012 08:49 - Don't be daft, your financial advice is deeply flawed. Borrowed money has to be paid back eventually and bank charges are going to be far less than a debt collector.

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I don't doubt there are genuine hardship cases but surely these numbers show the true extent of the past casual attitudes of many towards borrowing. I do not support heavy handed or unreasonable recovery tactics but surely most understand that these debts have to be repaid. My fear is that many will continue to borrow, simply thrust their heads ever more deeply into the sand with an expectation that the problem will just "go away" or that due to the sheer number of delinquent borrowers some concessionary solution will emerge. Let the "red arrows" commence....

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IF YOU ARE BEING HARRASED, A FEW TIPS,,,,,,WHEN THEY ASK FOR YOU TO CONFIRM WHO YOU ARE ON THE PHONE TELL THEM YOU CAN NOT TELL DUE TO THE DATA PROTECTION ACT , TELL THEM ,YOU DO NOT KNOW WHO THEY ARE AND THEREFORE THEY COULD BE TRYING TO SCAM YOU,,,,,,ALSO IF YOU SAY OWE £1,000, IF YOU PAY THEM THE £1,000 TODAY , YOU ARE PAYING £1,000, IF YOU WAIT UNTIL NEXT YEAR TO PAY THAT £1,000 THE £1,000 WOULD HAVE DECREASED IN VALUE DUE TO INFLATION SO YOU ARE REPAYING LESS , PLUS KEEPING IT IN THE BANK MIGHT HAVE GIVEN YOU A LITTLE INTEREST ,AND PREVENTED YOU PAYING INTEREST OR BANK CHARGES AND A YEAR OF OVERDRAFT CHARGES CAN QUITE EASILY BE £350, THE 99% ARE STARTING TO WAKE UP AND THE 1% ARE GOING TO HAVE TO PAY FOR THE COFFEE AND CORNFLAKES

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