Bad Debts Booming for NZ Debt-Collectors

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The recession may be over but figures released by transtasman debt collection agency Baycorp show its impact is still hitting profit and loss accounts nationwide.

Debt referred to Baycorp, which holds 35 per cent of the market, has been increasing since mid-2007 and is now at its highest level since 2002.

At the same time, the cash collected from debtors has been on a steady decline since mid-2006 and is now at its lowest level since January 2001.

Fewer than four in 10 people who owe money actually stick to the payments they have promised.

Baycorp chief executive Geoff Harper says: “The willingness to pay is almost unchanged. What has changed is people’s ability to pay – this has reduced.”

Debtors are more likely to seek a payment arrangement than pay their debt in full, and the average payment has declined 25 per cent. “People are paying less and taking longer to repay,” Harper says.

There has been a 49 per cent increase in the average amount owed since 2006, and a marked increase in commercial collection referrals. Read More

Debt Collection, Debt Collectors, Bad Debt Recovery, Commercial Debt recovery, Terms of Trade, Credit Reporting, Legal Services, Skip Tracing, Tracing and Investigative Services

Debt Collection Booming Business

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WASHINGTON — In the often murky waters of the debt collection industry, United Recovery Systems in Houston is considered a “whale hunter.”

In its search for clients, United isn’t looking for mom-and-pop businesses with a few hundred deadbeat customers. It wants bigger fish.

Its client roster includes national banks, international credit card issuers and domestic and foreign auto finance giants, each of whom count on United to make good on their bad accounts.

In the current economic climate, the “whales” are virtually jumping out of the water and into United’s boat. The company is taking in $937 million a month in new accounts, compared with about $550 million a month last year, said United’s marketing director, Sean Keegan.

After beginning the year with 1,200 debt collectors, United has added 300 and will add another 300 by year’s end.

“The volume was so huge that we had to run out and hire collectors,” Keegan said. “I can’t put 5,000 accounts in this guy’s file box for him to work this month. I have to go hire new people.”

United’s growth spurt isn’t an aberration. Across the country, dozens of established collection agencies are expanding their operations and hiring collectors, managers and support staff to keep up with the rising tide of bad debt due to massive job losses.

As real estate values fall, homeowners can no longer tap their home equity to pay down debt. So antsy creditors are farming out more problem accounts to collectors after declaring them as charge-offs, or losses.

With billions of dollars outstanding on millions of past due accounts, creditors want their money now and collection agencies with a track record of success are cashing in. READ MORE

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Debt reduction ; How to reduce debt

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Some very helpful advice from Wells Fargo on reducing debt

Does your debt outweigh your income? Do you find yourself only able to make the minimum payment on your credit card? Have you gone from using one credit card to two, three, or more? These are some of the standard warning signs of debt. If you recognize any of them in your own financial picture, take action to get your debt under control. Consider the following:

FIGURE OUT WHERE YOU STAND
Before you make a plan to get out of debt, get a sense of where you stand financially. Look over your outstanding debt — credit cards, car payments, mortgage, and student loans — to help you determine what your true needs are and what obligations have become hardest to manage.

Create or revise your budget based on your income and your expenses. Figure out how you can cut back on what you’re spending.

MAKE A PLAN

Call your creditors if you can’t make a payment or need to make a partial payment. Talk to them about payment plans you can afford. Creditors will want to work with you to find a solution. Also consider these options:

Pay off the highest-interest debt first. First pay off the balances of loans, lines of credit, and credit cards with the highest interest rates. Continue to pay at least the minimum due on your other accounts, especially one as important as your mortgage.

Refinance your mortgage. If interest rates have dropped since you took out your mortgage, consider refinancing to lower your monthly payments. You can also accomplish this by increasing the amount of time you take to repay your loan, or by changing the type of mortgage loan you have.

Consolidate your debt. Rolling all of your debt into a single loan won’t immediately reduce your debt, but it may reduce your monthly payments, and having just one bill will make tracking and payments easier.

If you’re a homeowner, you have the additional option of consolidating debt through refinancing or home equity financing. This may allow you to save even more through tax-deductible interest

Limit your credit use until your finances are under control.
See a credit counselor to help you explore your options and make a plan to get you out of debt.

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Collectors report more business, but tougher time getting paid

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Reports from the U.S show debt collection has rise in business. Press Democrat report;

Debt collection is a growth industry these days, but that doesn't mean it's a terribly profitable one.

As more people fall behind on their credit card bills and car payments, collection agencies are busier than ever, churning out warning letters, calling people's homes or businesses and even dragging them into court.

But collecting on those mounting debts is tougher than ever. High unemployment and plunging home equity have left debtors with fewer resources -- and some say less inclination -- to repay debts and repair their credit ratings.

"I work four times as hard to collect the same amount of money as I did two years ago," said Robert Tavelli, head of the Santa Rosa-based collection firm NCCS Inc. "We're seeing probably a 300 percent increase in listings with no greater increase in recoveries."

No one's going to shed a tear to hear debt collectors are having a tougher time shaking down people who are behind on their bills. Some might even cheer.
But the inability to collect outstanding bills is a serious problem for businesses, and one that could threaten a sustained economic recovery. The more bad checks or delinquent accounts a business can't recover, the greater the pressure to cut employees, who in turn might fall behind on their own bills, creating a vicious cycle.

"Many of my clients are suffering," Tavelli said. "They've had to lay off people because they can't collect their receivables."

When it becomes a choice between sending customers or patients to collections and keeping employees, businesses are increasingly choosing collections, said Chris Schumacher, president of Optio Solutions, a collection firm based in Rohnert Park.
When business was good, companies focused on growth. Now that it's gotten tougher, many are watching in horror as the bad debts on their books mount, leaving them little choice but to take a tougher approach to collect past-due bills. Read full article by clicking here