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From the Credit Today forum. Don'tcha just feel sorry for them. 
Rocky road ahead for collections industry - 30/04/2008
The debt collection industry needs to protect itself from the impact of the credit crunch, credit reference agency Equifax has urged.
It said that amid the current climate more debt is likely to be sold earlier to reduce funding and operating costs for lenders but that funds to buy new debt will become harder to find and more costly.
On the front end, it said that collecting from debtors will become more difficult as consumers struggle to meet increasing payments.
"When collecting debt over the coming months companies should be aware that the behaviour of customers could be quite different to what they may have seen previously," said Neil Munroe, external affairs director for Equifax.
"Almost every credit option will be harder for consumers to get, especially those already experiencing some financial difficulties. For example, access to consolidation loans will be more restricted. And this means more debts are likely to fall into arrears. Re-mortgaging will also become more difficult."
As many debtors fail to manage or pay their debts, there could be an increase in IVAs, bankruptcies and debt management plans, the agency predicted. It added that debt collectors will need to identify those likely to go insolvent and those who can be persuaded to maintain a debt repayment agreement.
The agency also believes repossessions will rise and that there is a strong chance couples will split up and move to avoid debts, making the tracing of debtors effectively even more important.
"We are expecting some key changes in the market, which means debt collection departments and agencies will need to make use of the best prediction and tracer tools," added Munroe.
The debt collection industry needs to protect itself from the impact of the credit crunch, credit reference agency Equifax has urged.
It said that amid the current climate more debt is likely to be sold earlier to reduce funding and operating costs for lenders but that funds to buy new debt will become harder to find and more costly.
On the front end, it said that collecting from debtors will become more difficult as consumers struggle to meet increasing payments.
"When collecting debt over the coming months companies should be aware that the behaviour of customers could be quite different to what they may have seen previously," said Neil Munroe, external affairs director for Equifax.
"Almost every credit option will be harder for consumers to get, especially those already experiencing some financial difficulties. For example, access to consolidation loans will be more restricted. And this means more debts are likely to fall into arrears. Re-mortgaging will also become more difficult."
As many debtors fail to manage or pay their debts, there could be an increase in IVAs, bankruptcies and debt management plans, the agency predicted. It added that debt collectors will need to identify those likely to go insolvent and those who can be persuaded to maintain a debt repayment agreement.
The agency also believes repossessions will rise and that there is a strong chance couples will split up and move to avoid debts, making the tracing of debtors effectively even more important.
"We are expecting some key changes in the market, which means debt collection departments and agencies will need to make use of the best prediction and tracer tools," added Munroe.
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