Moore and Blatch says lenders face challenge in debt recovery

Debt recovery specialists Moore and Blatch has warned that changes in personal attitude to debt could present lenders with new challenges in debt recoveries.

Recently published statistics from the government’s Insolvency Service, show
that more than 23,000 people became insolvent in England and Wales during
the first three months of 2006.

That represented a 73% rise on the same period last year and gave further
credence to the view that 2006 could see record levels of personal
insolvency.

Paul Walshe, head of lender services at Moore and Blatch, says: For several
years now lending has boomed to fuel the growing buy now, pay later
culture.

“This has been supported by rising property prices, coupled with
low interest rates and stable unemployment to create high consumer
confidence.

But these figures from the Insolvency Service show that debt has spiralled
out of control for thousands of individuals.

More than 100,000 people are likely to enter IVAs this year. In recent months, more stable house prices, the potential for interest rate rises and rising unemployment are starting to bring a dose of reality to the consumer.

The Council of Mortgage Lenders has already reported rises in arrears and repossessions over the past year and these statistics give a strong indication that tougher times may be around the corner for lenders.

Now would be a good time to review and tighten procedures for arrears management and shortfall recovery.