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Archive for August, 2009
Tuesday, August 11th, 2009
With house prices becoming more stabilised in recent months, June saw a 23% increase on approved home-buyer loans compared to the previous month, according to UK lenders.
The Council of Mortgage Lenders (CML) had some interesting figures to declare in the monthly release of figures. Interestingly, the total amount of approved home buyer loans, approximately 45,000, was only 6% down on June of 2008, and while the market seems to be evening off again, it is still a long way from a return to the housing boom of not so long ago.
The estimated 45,000 approved loans amounted to an estimated £5.9bn and the amount of loans was considered to be at its highest level since July of 2008, which was when the housing market was beginning to fall into dire circumstances.
Paul Samter, CML Economist, speaking to the BBC, said “Low interest rates and realistic selling prices have helped generate a welcome increase in transactions. But there is some way to go before we reach normal levels of activity. There are tentative signs that lending criteria are easing, but remortgaging demand is likely to remain subdued whilst interest rates stay at current levels.”
While the average price of a loan for the purpose of purchasing a house rose from £105,000 in March to £111,000 in June, the amount required for a deposit is remaining static with most lenders requiring around 25%. This, of course, makes things a bit harder for first-time buyers to get on to the property ladder who now require a larger initial up front deposit.
Remortgaging also saw an increase in figures with an increase of 13% of 34,000 loans when comparing June with May.
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Tags: council of mortgage lenders, first time buyers, mortgage figures for June
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Monday, August 10th, 2009
The second quarter of 2009 saw a 27% increase in personal insolvencies from the same period of the previous year. That is 33,073 personal insolvencies.
The new figures, published by the Insolvency Service, show that out of the 33,073 personal insolvencies, 18,870 were bankruptcies (an increase of 15.3%,) individual voluntary arrangements (IVAs)Â accounted for 12,225 with an increase percentage of 27.4% and, finally, Debt Relief Orders (DROs) which accounted for the remaining 1,978.
Interestingly, 86% of the bankruptcies were made on the petition of the debtor which was a similar figure compared to the previous quarter and only lightly higher than the corresponding dates in 2007 and 2008. The percentage of bankruptcy orders involving trading debts (self employed bankruptcies) was 13.7 per cent in the first three months of 2009. Figures aren’t currently available for the second quarter but the first quarter figure was up slightly from 12.9 per cent in the previous quarter.
Broken down further, the above figures also reveal that 1,529 of the personal insolvencies were in fact corporate insolvencies, a rise of 22.7%.
Current trustee of charity “The Debt Advice Foundation” and former Chief Exec of Debt Free Direct, Andrew Redmond, said “as the recession continues to bite we anticipate that personal insolvencies will continue to rise, putting additional strain on debt advice resources. Citizens Advice Bureau is reporting over 7,000 debt enquiries every working day. Indeed the growing number of people struggling to cope with their debts has led us to create a dedicated Debt Advice Foundation helpline which will launch on Monday to provide immediate advice and assistance to UK consumers. Looking at the figures it is clear that the banks have relaxed their approach towards accepting IVAs; with IVAs up 27 per cent compared with bankruptcies at only 15 per cent. These figures do not reflect the much higher number of insolvent consumers entering unregulated Debt Management Plans – as yet the numbers of which are not included in official statistics.”
A spokesman for the Association of British Insurers said “the latest insolvency figures are alarming. They are particularly bad news for suppliers who are unsecured creditors, as it’s likely they will herald an increasing number of pre-packaged administrations, in a year which has already seen a record number.”
Of course, first glances do not always give a true account of the situation with many people now trying to declare themselves bankrupt or insolvent as they attempt to avoid paying back the massive amounts of debt being racked up when debt collection agents come calling.
In a society where “buy now, don’t pay later” is dominant and living beyond your means seems to be the norm, they have both certainly helped these figures to rise with the refusal of a large amount of individuals to take responsibility for their debt and actively seek to repay them. When they refuse and those owed money turn to debt recovery companies to help collect back the outstanding debt, some debtors even ask to be made bankrupt, rather than have to face paying their bill.
Tags: bankruptcies, debt management, IVAs, personal insolvencies
Posted in Debt News, Financial News | No Comments »
Friday, August 7th, 2009
A change of thinking and strategy by Indian banks in debt collection methods could result in an increase in profits. With delinquent debt being one of the largest debt collection opportunities for companies in India, full scale improvements in debt recovery processes and practices could see an increase of 10% on the overall sector profits, potentially as much as 15% for more aggressive lenders.
However, this is not going to be a walk in the park for the Indian banks. As the economic boom of 2004 to 2008 snowballed, Indian bank lending was readily available and people who should not have been given loans were given them without question. Indeed, since 2008 non-performing assets of the top 10 banks in India jumped to almost Rs20,000 crore in the fiscal ending March 2009, a 23% increase in just one year, as their profit growth slowed from 40% in 2007-2008 to 29% the following year.
With the economic downturn, however, many of these banks are now tightening their purse strings and trying to prevent loans from being given to the wrong people. Some banks have even gone as far as to stop unsecured lending alltogether!
There are plenty of problems facing the banks as they attempt to put the processes into place of ensuring that the problems they face now does not happen again. For starters there is a severe lack of fixed-line telephones in India, making contacting debtors for the purposes of commercial debt collection and recovery particularly difficult. Also, the lack of a fully functioning credit checks bureau makes tracking debtors more difficult as they change addresses and mobile numbers frequently to avoid paying their debt.
Then there are the legal costs. As the size of loans in India is small—they can be for as low as Rs5,000—pursuing collections through India’s slow legal system can prove prohibitively expensive. When banks do approach the courts, they can recover only 50-60% of defaulted loans. Close to half the cases are settled through a compromise—outcomes that could have been anyway achieved outside the judicial system at less cost. Therefore, Indian banks often find that they have little alternative other than to rely on field operations.
Independent debt-collection agencies who work for banks make direct contact with between 20% and 50% of potential defaulters in India. If we compare this with debt collection agencies in the UK, for instance, we find that less than 5% of delinquent borrowers are contacted directly by field agents. Unfortunately, debt recovery agencies are expensive in Indiatypically charging a 10% cut of what they recover on a loan that is between 90 and 120 days in default. For collecting on a loan that is late by 180 days or more, then the commission that they charge is at least 30%. Reliance on collection agencies can also extract a high price in terms of bad publicity. The agents are often poorly trained and use crude tactics such as endless phone calls and hiring local toughs to harass defaulters.
Tags: indian banks, indian debt collection
Posted in International Debt News | No Comments »
Thursday, August 6th, 2009
Commercial debt collection agency, Opus Agency, are reportedly putting together a case against the former directors of Network Data as they attempt to recover some of an outstanding debt to creditors, reports Introducer Today.co.uk.
According to Introducer Today, Opus, who have employed a large selection of international solicitors to handle the case, began collating evidence back in March, and to this day continue to investigate the behaviour of directors, including the chief exec of Network Data Holdings (Network Data’s Parent Company,) Richard Griffiths for the purposes of debt recovery.
It is unclear at this point as to whether Ivan Elliot and Grenville Folwell, other listed directors of Network Data, are also being investigated in this commercial debt collection issue, due to the matter only extending to ‘active and responsible’ directors, claims Introducer Today.
The website also claims that administrators Baker Tilly have declared that Network Data Appointed Representatives (ARs) will be unlikely to recover any unpaid commission payments back in a report released on the 16th of July. In the same report Baker Tilly also claimed that creditors had put in claims for £5,172,836 of unsecured debt unpaid by Network Data Holdings. However, unsecured creditors are still second in line for any payments after Bank of Scotland is paid the £3,856,440 in secured payments it is still owed.
Tags: commercial debt collection, Network Data
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Wednesday, August 5th, 2009
Robinson Way, the well performing and profitable debt recovery company of London Scottish bank, has been sold as Ernst & Young continued work after being called in to run the now defunct savings provider last year.
With profits of £6.3 million for the prior six months to October 30, 2008, it was always thought that a multitude of parties and private investors would be interested in the debt collection agency based in the Salford Quays, Manchester and a deal has now been struck. While the proposed figure of sale was undisclosed, it is thought that Ernst & Young had slapped a price tag of £100 million on the company.
It was December 1st, 2008 when the Financial Services Authority (FSA) forced London Scottish into administration after the bank had failed to meet capital requirements but it is only now that a deal has been agreed. While interest was high, investors failed to match Ernst & Young’s valuation and it is has now decided to sell to its managers.
London Scottish itself was initially founded over 100 years ago but hd losses of £22.4m in its consumer lending business in the year to October 31, 2007 and impairments mounted by a third to £38.3m.
Also sold was Morses Club, the doorstep lending business to management and RCapital, the private equity firm, in April for an undisclosed sum.
The group has few remaining assets: it has closed most of its branches and sold its office in Manchester, and its Manor Credit leasing business, for £45.2m in 2007 in an effort to raise cash.
Tags: ernst & young, manchester debt collection, robinson way sold
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Tuesday, August 4th, 2009
For any debt, there is a right thing to do. The right thing for a debtor to do, is to make good on their contract or promise and pay off their debt, and, from the debt collection aspect, that the collector’s deal with the debtors in a calm and professional manner.
The Federal Trade Commission (FTC) gas recently released a report showing how, and aiming to, debt recovery agencies in the US can ensure that they are handling their in-house methods correctly and professionally.
The first recommendation that the FTC suggested to Congress was an improvement in the methods of information that debt collectors ue to trace debtors. As a by product of this change, the FTC wants this update to coincide with the way collection agents contact debtors.
Of course, debt collectors have a right to collect a debt. Unfortunately, some companies buy and sell debts to other companies and sometimes information can be lost or misinterpreted.
Each debtor has a right ro pay what they owe. If the amount is disputed, then putting that dispute in writing stating the amount that they believe is owed, and why, together with any documenting evidence to prove this is the correct procedure. Simply ignoring the matter is not the way to handle things, as is making a promise that a debtor cannot resonably expect to keep. Monthly payments of XXXXX amount more than their monthly salary for instance.
All in all, it is a two way process with give and take required from both side, but by keeping the lines of communication civil and open, then a resolution will often be much more straight forward.
Tags: Federal Trade Commission, us debt collection
Posted in International Debt News | No Comments »
Monday, August 3rd, 2009
10 families are facing the prospect of a visit from Bailiffs and debt recovery agencies to recover debts relating to unpaid school dinners and school trips, as a head teacher gets tough.
Simon Emsley, head of Lakeside School, Derbyshire, is desperate to try and recoup the money and said “It is time to get tough as the cash we are having to use to plug the debt is coming out of our budget. The selfish actions of a few are spoiling things for the majority of pupils.”
Unfortunately, it would seem that parental debt is not isolated to just Lakeside School and it is though that across Derbyshire, thousands of pounds in unpaid fees is still owed, and even more has been written off when a child changes schools.
Due to the escalating amount of debt, Mr Emsley had no alternative but to cancel the annual free trip to the pantomime as, due to the costs of trying to recover the debt, he hole left in the schools budget meant the trip could not be funded.
“This will happen again this year if we can’t recover some of this money but it really isn’t fair on those people who pay regularly,” said Mr Elmsley.
Each school is responsible for recovering monies to ensure that they break even on their budget. Almost three years ago, the Derbyshire City Council recommended that head teachers should write to parents to ask for owed monies, but these requests seem to have fallen on deaf ears, with Mr Emsley saying that the letters were not working. It had even been suggested that schools should take parents to court to claim back their money.
Mr Emsley said “I don’t think the school governors and other parents would thank me for spending excessive amounts of money to recover the debt.”
Mr Emsley has now been forced to turn to the city council debt collection department for advice as he looks to find out what further action could be taken.
The problems began for Lakeside Community Primary because certain parents were sending their children to school with no food or money to pay for meals and while Mr Emsley admitted he found it difficult to allow children to go hungry, he also felt that these parents were taking advantage of his good nature. Other parents have agreed for their children to go on extra-curricular school trips but have not paid the fees.
The irony is that those families involved tend to be those who are NOT suffering with financial hardships as those families already receive free meals for their children.
Tags: education debt collection, unpaid tuition fees
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