Figures that show the full extent of outstanding consumer debt passed to Debt Collection Agencies (DCA’s) or sold to Debt Buyers have been published for the first time today by The Credit Services Association (CSA); the National Association for the UK debt collection industry, who represent 90% of the debt collection industry.
At the end of 2011, the total value of unpaid consumer debt held by CSA members for collection stood at £58 billion (£58.179bn), comprising £31 billion (£31.239bn) placed by creditors with DCAs to collect, and a further £27 billion (£26.940bn) of purchased debt owned by Debt Buyers.
The total number of consumer debts awaiting collection by CSA members now stands at a staggering 32 million (32,130mn) as at the end of December 2011 – the equivalent of at least one significant debt for every UK household or £1,000 of uncollected debt owed by every man, woman and child in the country.
Six months earlier (H1 2011) the total value of unpaid consumer debt stood at £52 billion (£51.875bn) across 28 million (28,049mn) cases – so both the number and the value of debts are definitely rising.
The CSA President Sara de Tute attributes this rise to a range of different factors:
“The economic environment has undoubtedly become more difficult,” she says, “and so it is no surprise that debts are rising. But there are also other reasons, including ‘new’ creditors within the private sector and parts of national government who no longer see an issue with outsourcing debt for collection to professional and highly regulated agencies capable of recovering monies vital to the public purse.
“Indeed the government has gone on record recently (as part of its Fraud, Error and Debt initiative) as reporting that overdue debts cost it between £7 – £8 billion – 95 percent of which resides with the Department of Work and Pensions (DWP) and HMRC – and part of this has now been passed to our members for collection.”
Sara says goes on to say that despite the vast sums of money involved, this is far from being a ‘boom time’ for the
industry; “Our role is a difficult one,” she says, “since we are at the end of an often very long recovery chain.
“But 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. There is a clear trend at the moment for consumers to be more inclined to pay off their debts or reach a settlement wherever possible. Such deleveraging is a clear indicator of individuals working to improve their personal balance sheets in these times of economic uncertainty.”
“This has a direct impact both on the amount of future credit available and the interest rates that we all have to pay,” she concludes.
Consumer collections by CSA members were £1.207 billion in H2 2011 reflecting increasing quarter on quarter collections that ended Q4 at £479 million – a rise of almost £100 million since Q2.
At the risk of sounding smug; we told you so!
Over the past two years Landlord Referencing have been trying to highlight the facts that:
- throwing swathes of cash at defunct banks,
- using public funds to support bank debt and pay bonuses,
- whilst not reinvesting that money
- OR using the low interest rates to invest it back into manufacturing and construction;
- coupled with ill-thought out policies & legislation
would end up causing our economy and housing sector to implode.
Two years down the road; we are now in a double dip recession.
At Landlord Referencing Pay Day Loan Repayment VS Rent cases have become epidemic and landlords and letting agents right across the country are experiencing a definite increase in rent defaults and property damages, e.g.
- In 2011 Landlord Referencing Services sent out £2, 404, 234.42 worth of accumulated Rent Defaults and Property Damages via Tenant Alerts.
- From the 1st Jan 2012 – 27th April 2012 the Tenant Alert accumulated Rent Default & Property Damage total currently stands at £756,353.21.
- This week alone has generated a Tenant Alert accumulated Rent Default & Property Damage total equalling £47,166.79.
(Tenant alerts are based on our community reporting tenants that vacate with significant rent defaults and/or property damages.)
Even with our thousands of community members, there is an estimated 1.5 million landlords and 4.3 million PRS households in the UK; so our tenant alert statistics only uncover a small portion of what is really going on behind the closed doors of the PRS.
Therefore if every landlord in the UK were to join our unique network we roughly calculate that the accumulated Rent Defaults & Property Damages for 2011 would be in the range of £50 million!
The current government has shown no desire to understand the ordinary lives or needs of their voters – as one of their own party voiced earlier this week; MP Nadine Dorries described her party’s leadership as “two arrogant posh boys who don’t know the price of milk “ on BBC2’s Daily Politics Show – so now is the time for us all to work together; for the sake of our future, our children’s future, and so on.
Nor have they shown that they have a concrete plan to kick start the manufacturing and construction industries in this country.
If a garden is out of control we all understand that it needs to be cut back, in order for it to be able to flourish again - NOT to stop watering it entirely; as it will inevitably stop growing and die.
- Are you a landlord who is owed rent? Click here.
- Are you a landlord who’s property had been destroyed by a bad tenant? Click here.
- Are you a good tenant with bad neighbours or a rogue landlord? Click here.
- How can I spread the word as an Landlord Referencing member? Click here.
- Wonga borrowers sign away their data protection rights.