Shortened Debt Collection Timeframe Hits the CSA Wall

The Credit Services Association (CSA) has managed to halt plans to reduce the debt collection timeframe from six years to three.

In a combined effort with other industry partners, the Credit Services Association has managed to persuade the government to halt plans for changes to the Civil Law Reform Bill. As a draft, the Bill proposed reforms that would reduce the period within which a debt could be collected from six years to three.

The CSA successfully argued, however, that by doing so it would put debtors at a greater risk as any reduction in limitations would mean that creditors would go further to recover debt faster, rather than negotiate long term repayment plans.

If the new plan had succeeded in going through, legal action could have been sort much earlier in the debt recovery process and this would have had a harmful impact on debtors and their credit ratings.

The CSA’s Head of Compliance, Claire Aynsley, said “Whereas creditors would be well within their rights to take such action, one can only imagine the consumer, media and political uproar there would have been had more debtors been dragged through the courts. ­This is assuming the court system could have coped with the increased caseload, and the advice groups could manage the growing number of debtors needing their help.”

“Many of the debts that are sold on by utilities, banks etc are between two and four years old,” she explained. “If the limitation period was reduced to anything less than four years such accounts would be uncollectable. If you consider that more than £15 billion of uncollected debt was purchased in 2007, and that figure is likely to be larger today, one begins to understand what a disastrous impact writing off such huge sums would have on the economy.”