Figures published by The Credit Service Association (CSA) have revealed that £58billion of unpaid consumer credit has been outsourced to debt collection agencies throughout 2011. These figures have been released just two days after it was announced that the UK had slipped into a double-dip recession as UK GDP shrank 0.2% during the first quarter of 2012.
What is concerning is that a staggering £6billion was outsourced during the last 6 months of 2011 alone; demonstrating that there has been a considerable increase of consumers who are struggling to maintain repayments to their credit commitments.
According to Credit Action statistics total consumer credit lending to individuals was £207BN at the end of December 2011 which basically means that a staggering 28% of consumer debt is going bad. This total has decreased by around £7BN in the 12 months to December 2007 but a large proportion of that decrease has been written off.
The CSA has noticed a ‘cultural shift’ in the debt collection industry as government agencies such as HMRC are choosing to outsource their debt collection activities, joining mainstream consumer lenders as well as utility companies.
Sara de Tute, The president of the CSA said: ‘The economic environment has undoubtedly become more difficult and so it is no surprise that debts are rising’.
The CSA is the national body for the debt collection industry in the UK and this is the very first time that details of collections and debt values have been published.
Bev Budsworth, MD at The Debt Advisor said: ‘These figures have been released at a time when consumers are already under tremendous financial pressure; rising utility bills, cost of living and now the proposed new rules set to ‘trap’ borrowers which have recently been released by the FSA – it all adds up.’
‘There are definitely more tough times ahead and we often come across clients who try to obtain more finance in a bid to repay some of their other commitments; my advice would be to make provisions to repay your debt as soon as you possibly can’.
‘If you are unable to afford your commitments, there are a number of options available such as debt management plans which enable you to repay your debts at a level you can afford and for those with higher levels of debt, an IVA may be appropriate.’
There are a number of options which may be available and the team at The Debt Advisor will guide you through the most suitable options available to you.
The Debt Advisor are members of the DRF and are also regulated by The Financial Conduct Authority no 60669. Contact us on 0800 085 1825 for further information or click here to request a call back from a member of our team.