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| Debt collection agencies are tracking down £60bn | Debt collection agencies are tracking down £60bn |
| (3 months later) | |
| Almost £60bn of unpaid consumer debt had been passed to debt collection agencies by the end of 2011, with government departments increasingly using agencies to recover outstanding money, according to the first set of figures published by the industry. | Almost £60bn of unpaid consumer debt had been passed to debt collection agencies by the end of 2011, with government departments increasingly using agencies to recover outstanding money, according to the first set of figures published by the industry. |
| The figure grew by £6bn in the second half of the year, and the Credit Services Association (CSA), the trade body for collection agencies which published the figure, said that the amount of outstanding debt had been steadily increasing in recent years. | The figure grew by £6bn in the second half of the year, and the Credit Services Association (CSA), the trade body for collection agencies which published the figure, said that the amount of outstanding debt had been steadily increasing in recent years. |
| Most of the debt has been passed on by mainstream lenders, but utility companies and phone providers are also using debt collection agencies, as, increasingly, are government departments such as HMRC and the Treasury. The CSA said payday loan companies made up just "a smattering" of those lenders using the 90% of the industry it represents. | Most of the debt has been passed on by mainstream lenders, but utility companies and phone providers are also using debt collection agencies, as, increasingly, are government departments such as HMRC and the Treasury. The CSA said payday loan companies made up just "a smattering" of those lenders using the 90% of the industry it represents. |
| A spokesman for the CSA said there had been "a cultural shift" which meant more government agencies were outsourcing debt collection. | A spokesman for the CSA said there had been "a cultural shift" which meant more government agencies were outsourcing debt collection. |
| The CSA's president, Sara de Tute, said: "The economic environment has undoubtedly become more difficult and so it is no surprise that debts are rising. | The CSA's president, Sara de Tute, said: "The economic environment has undoubtedly become more difficult and so it is no surprise that debts are rising. |
| "But there are also other reasons, including 'new' creditors within the private sector and parts of national government who no longer see an issue with outsourcing debt for collection to professional and highly regulated agencies capable of recovering monies vital to the public purse." | "But there are also other reasons, including 'new' creditors within the private sector and parts of national government who no longer see an issue with outsourcing debt for collection to professional and highly regulated agencies capable of recovering monies vital to the public purse." |
| She added: "The government has gone on record recently [as part of its Fraud, Error and Debt initiative – pdf] as reporting that overdue debts cost it between £7bn and £8bn – 95% of which resides with the Department of Work and Pensions and HMRC – and part of this has now been passed to our members for collection." | She added: "The government has gone on record recently [as part of its Fraud, Error and Debt initiative – pdf] as reporting that overdue debts cost it between £7bn and £8bn – 95% of which resides with the Department of Work and Pensions and HMRC – and part of this has now been passed to our members for collection." |
| At the end of 2011, the CSA said its members were handling 32m unpaid debt cases, the equivalent of at least one significant debt for every UK household. Six months previously the figure stood at 28m. | At the end of 2011, the CSA said its members were handling 32m unpaid debt cases, the equivalent of at least one significant debt for every UK household. Six months previously the figure stood at 28m. |
| Of the total in debt collectors' hands in December 2011, £31bn was placed by creditors with debt collection agencies to collect, and a further £27bn was debt owned by debt buyers. | Of the total in debt collectors' hands in December 2011, £31bn was placed by creditors with debt collection agencies to collect, and a further £27bn was debt owned by debt buyers. |
| The CSA said debt passed on by lenders tended to be "fresh debt", which was less than six months old. It said the chance of recovering this debt was high, and often just a letter from the collection agency resulted in it being cleared. In contrast, that bought by companies was often old debt which had been sent out to agencies before and returned to lenders when it remained unrecovered. | The CSA said debt passed on by lenders tended to be "fresh debt", which was less than six months old. It said the chance of recovering this debt was high, and often just a letter from the collection agency resulted in it being cleared. In contrast, that bought by companies was often old debt which had been sent out to agencies before and returned to lenders when it remained unrecovered. |
| Joanna Elson, chief executive of the Money Advice Trust said the figures made it clear that individuals across the UK were struggling to clear huge amounts of debt. | Joanna Elson, chief executive of the Money Advice Trust said the figures made it clear that individuals across the UK were struggling to clear huge amounts of debt. |
| "We have seen just his week that the UK economy has returned to technical recession, but the reality for many people is that the recession never really went away at all, meaning they have been struggling to make ends meet for the last few years. | "We have seen just his week that the UK economy has returned to technical recession, but the reality for many people is that the recession never really went away at all, meaning they have been struggling to make ends meet for the last few years. |
| "When it costs more and more to put food on your table, heat your home and fill up your car, credit card repayments become less of a priority." | "When it costs more and more to put food on your table, heat your home and fill up your car, credit card repayments become less of a priority." |
| Elson added: "While many debt collection agencies work fairly and within rules and regulations, our advisers at National Debtline do hear of lots of cases where individuals are unduly and unethically harassed for money they owe. | Elson added: "While many debt collection agencies work fairly and within rules and regulations, our advisers at National Debtline do hear of lots of cases where individuals are unduly and unethically harassed for money they owe. |
| "There are many tactics we have seen from debt collection agencies over the years which fall beyond what is allowed, such as visiting people at work, sending letters that look like court forms and calling at all hours of the day. Anyone who feels they are being unfairly treated can seek further guidance from National Debtline on what to do about it." | "There are many tactics we have seen from debt collection agencies over the years which fall beyond what is allowed, such as visiting people at work, sending letters that look like court forms and calling at all hours of the day. Anyone who feels they are being unfairly treated can seek further guidance from National Debtline on what to do about it." |
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