NEWS...
Collectability Index
Collectability of Debts in Dramatic Decline
The CSA and DBSG have reported a serious decline in the collectability of debts.
The dwindling availability of credit from the banks, a lack of availability of mortgages for refinancing, a dip in house prices, an increase in unemployment, all combined with the prevailing public mindset brought about by media hype surrounding the credit crunch, is having a sustained impact upon the amount of debt that is currently being collected.
That was the key finding of the 2008 'Collectability Index' produced by the CSA and the DBSG, a quarterly document that acts as a barometer on the industry. It is helps determine a debtor's ability to pay, measured by the values and volumes of new instalment plans and settlements concluded between a debtor and either an agency or a purchaser over a given period, as reported by members.
With access to credit tightening for consumers, refinancing becoming increasingly difficult and unemployment steadily rising, settlements and instalments of debt have declined dramatically. The index illustrates not only a noticeable drop in the consumers able to settle their debts on first contacts - it also shows that instalments are suffering too.
Trends in Detail
Ratio
The proportion of settlements to instalments declined in the second half of 2008. A much higher number of debtors opted for instalments rather than settlements in Q4 compared to Q1. Between Q1 and Q2 the ratio was stable at 33% settlements, before dropping to25% in Q3 and to 23% in Q4.
Settlements
The average number of settlements increased in Q2, before decreasing again in Q3 by 15%. They have since fallen again by another 11% with the index closing at 384.
Instalments
The value of instalments varied in Qs 1-3 by only 10% either way, before falling by a staggering 27% per payment in Q4, with the index drawing to a close at 27.
Original article courtesy of CSA. For further information visit www.csa-uk.com/csa/
