Debt agencies chase £58bn of Brit debt

As the economy contracts, debt expands - and by some margin. It's estimated debt collection operators are attempting to claw back almost £60bn from British families, be it credit card debt or loans.

New data from the Credit Services Association (CSA) claims this figure has jumped by a massive £6bn in the last six months alone. Why?


Pressure builds

There are several reasons for the surge. One major shift though is a Coalition government which has no problem with outsourcing debt for collection to debt agencies.

"Indeed," says CSA President Sara de Tute, "the government has gone on record recently 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."
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The CSA claims 32m individual debts are now being pursued. That's 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, says the CSA.

Recoverable?

But some council chiefs know already that much of the debt owed them is not recoverable. Recently Gateshead Council Cabinet agreed that the Council would write off around £1m of uncollected business rates. The vast majority of these debts relate to local business bankruptcies and insolvencies.

Debt collection agencies deploy a range of tactics to claim back money owed, often adding sizeable fees onto the debt owed. However the Government has published clear guidelines on how to deal with these agencies.

Debt collectors don't have the same powers as bailiffs. They can't enter your home or take your possessions and can only write, phone, or visit you to discuss the situation.

Consumer collections by CSA agencies hit £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 says the CSA.

If you're in debt trouble, do take advice. Both the Citizens Advice Bureau and websites such as The Consumer Action Group can be useful resources.

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