You asked us........

"Whilst London House is not a debt collection agency (DCA), what do you make of the recent figures released by The Credit Services Association?" 

Frankly, they are mind boggling! We are not a DCA but do of course become involved in tracing the debtors, interviewing them or indeed serving papers on them. The figures released by the CSA (based on member information submitted to them) show that agencies are currently recovering nearly £6m debt everyday. As at the end of March, the total value of unpaid consumer debt held by CSA members for collection was £58billion.

The total number of consumer debts awaiting collection stands at a staggering 32 million. The CSA members have reported a trend of new consumers falling into debt for the first time, with many consumers having nothing left to cushion them from any emergencies which may arise. It appears that the double dip recession has resulted in an increase in the number of debtors from more affluent households seeking financial help and advice.

CCCS Consumer debt and money report

New research commissioned by the Consumer Credit Counselling Service (CCCS) suggests young people are being disproportionately affected by the deteriorating state of the economy.  

The CCCSConsumer Debt and Money Report Q1 2012, produced by the Centre for Economics and Business Research (Cebr), identifies a generation of ‘baby-busters’ – people born in the 1980s to the baby-boomers but facing a range of problems limiting their financial prospects. 

Unemployment

• Under 25s now make up the largest group of unemployed people in the UK. One in four men and one in five women aged under 25 are out of work – with increasing long term consequences. Among young people helped by CCCS, around 45 percent are unemployed compared to 30 percent of all debt advice clients.

Stagnating incomes, struggling with debt

• In the first quarter of 2012, CCCS provided debt counselling to 3,600 people under the age of 25, or around 40 people every day. Unsecured debt levels are relatively low, averaging £5,800, but low incomes and high unemployment make repayment more difficult – average monthly take-home pay is £980, £400 less than the average client.

Tuition fees

• With two out of five young people aged 18-22 attending university, tuition fees will add roughly £9,500 to the debt burden of the average British citizen of future generations, meaning less money available for savings and less of a cushion against debt distress.

For the population as a whole, the CCCS Interest Burden Index shows debt servicing costs are broadly stable. The typical household paid £197 a month to service debts, more than a quarter of average household income after essential living costs. 

The report is based on data compiled from CCCS activities – more than 1,000 people get help from the charity to resolve debt problems every day.

You Asked Us

"The CSA has recently released, for the first time, details of the debt levels that have been passed to its members for collection. Any thoughts on the amounts?" 

They are big to say the least! At the end of 2011, the total value of unpaid consumer debt held by CSA members for collection stood at £58 billion (£58.179bn), comprising £31 billion (£31.239bn) placed by creditors with DCAs to collect, and a further £27 billion (£26.940bn) of purchased debt owned by Debt Buyers. 

The total volume (ie number) of consumer debts awaiting collection by CSA members now stands at a staggering 32 million (32,130mn) as at the end of December 2011 - 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. 

The figures show a rise on previous quarters, both in volume and amount, reflecting the economic climate. We are, of course, officially back in recession. In view of this, it remains to be seen how much of these figures can be collected. Full details can be found at the following link:

Unpaid debt figures