UK Debtors Not Able to Settle in Full
More consumers in the United Kingdom opted for payment plans with collection agencies in the first three months of 2008, according to U.K. debt collection industry trade group the Credit Services Association (CSA).
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The group said that 249,171 U.K. consumers had engaged in payment plans with debt collection agencies in the first quarter, up 10 percent from the fourth quarter of 2007.
“Anecdotally our members are already reporting that debtors are increasingly turning to installment plans, where they can pay outstanding debts to an agreed monthly schedule, rather than settling their debts outright,” Kirk Obermaier, director of CSA, told London newspaper The Daily Telegraph.
Collection agencies in the U.K., and well as the U.S., typically attempt to persuade the consumer to settle the debt in full. Payment plans are often initiated when a debtor cannot repay the debt in full.
The CSA said that things may get even worse. "We expect the situation to get worse, and the number and value of installments to rise, as the consumer access to credit tightens, refinancing becomes more difficult, and unemployment rises,” Obermaier told The Telegraph.
The rise in payment plans versus settlements in full is being blamed on the credit crunch that began in the U.S. and has extended to other economies.
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