If your financial situation deteriorates and you find yourself unable to make the repayments on your debts, it can be a stressful and daunting position to be in. You may worry about the risk of your possessions being seized to recover the debt or the thought of having bailiffs coming to your door. However, it’s important to know the facts about failure to make repayments. In reality, if you take proactive action as soon as you realise there’s a problem, it’s unlikely that your situation will become extreme enough to warrant seizure of belongings.

Generally once you have missed around three to six payments, you will receive a default notice from your creditor through the post. The letter will formally explain to you how many payments have been missed, the steps you need to take to put your account in order and the measures the creditor will take if you fail to do this. Some of these measures may include preventing access to your credit facility, selling your debt to a collection agency or repossessing items as part of your agreement. The latter two generally only happen in more serious circumstances.

At this stage, it’s wise to take the necessary steps as directed in your default notice as soon as possible. If for any reason you are unable to do this, get in contact with your creditor. The worst thing you can do is to ignore your creditor’s correspondence.

If you fail to acknowledge notices from your creditor, it’s likely that they will enlist the help of a debt collection agency to recover the debt so you may receive a letter from an agency such as Wescot, who would encourage you to pay your debt. If your creditor has sold your debt to the agency then you would owe the agency rather than your original creditor.  At this point you are still able to negotiate repayment terms which work for you.

In extreme circumstances you may receive a visit from a bailiff who will recover items of value to cover your debt. However, this can only happen following a court order or if you have an unpaid council tax bill. It’s important to remember that a debt collector is not the same as a bailiff.

If you do find yourself missing payments, get in touch with your creditor as soon as possible. The sooner you address the issue the easier things will be in the long run.

If you are a business and are trying to recover a debt, it’s not unusual for the customer to disappear leaving you in a difficult situation. You may not know where to start when trying to trace a customer but there are steps you can take.

In most cases, the customer will leave an electronic trail. This can be through a variety of different ways such as depositing money into a bank account, paying income tax or even buying or selling a house. This can be extremely useful when trying to track down a customer.

You may wish to enlist the help of a professional tracing company who will know the best methods to use. Many will offer electronic tracking or even physical tracking if necessary. Some companies will also offer pre-legal financial checks. This is where the tracing company will investigate the assets of the customer and find out their real financial position before you embark on expensive legal proceedings.

Many tracing agents will have access to a variety of investigative channels such as the Land Registry, the UK Direct Enquiry Database, credit databases showing applications made for credit, insolvency searches, electoral roll information and birth, death and marriage records. All of these means can be helpful in establishing contact with customers.

However, trace exercises don’t just have to be used for recovering a debt. Recently, the debt collections agency Wescot provided trace support to Swift Advances as part of a remediation plan whereby it was required to offer small refunds to previous customers.  The company used lead generation and contact activity to successfully trace 80% of customers.

Tracing and contact services are becoming a vital part of customer service and remediation across a wide range of sectors. If your business is owed money, locating your customers is a crucial part of ensuring successful receipt of payments. There are many different techniques which can be employed to track down customers and achieve positive trace results. A professional tracing company will be able to advise you on which approach is best for your needs. With UK personal debt at a staggering high, it’s all the more important for businesses to recover funds as quickly and cost effectively as possible.

The UK debt collection market is currently dominated by the highly public news about staggering levels of banking debts, yet less widely known is that the government is owed even more than this by individual consumers. The good news is that managing such debt has long been a part of the banking remit, and the sector is geared-up to control this part of their business with a reasonable degree of efficiency. They attack the problem by a range of obvious methods seeking to stimulate business growth, and through investment in their people, yet other means at their disposal are just as valid, and can be equally effective in managing future risk.

Raising capital is one area that can deliver value directly to the balance sheet, but through disposal of risky assets, and non-profitable parts of the business instead of consumer debt. This particular issue has undergone a major period of change in the last 4 years. In arresting consumer lending so abruptly the market has been able to largely re-correct itself in this area, effectively allowing the risk to manage itself for a time, and giving the industry a temporary breather. Wescot Credit Services have seen that organisations can derive greater benefit by shifting assets in other areas.

A second area for focus in on compliance. In the wake of the banking crisis the spotlight has fallen on the concept of TCF, or Treating Customers Fairly. Internal and policies and practices in areas such as tracing, debt collection and debt purchasing need to be robust and not only meet but exceed regulatory expectations, to avoid costly financial penalties. Wescot Credit Services are pioneering a new approach to an FCA framework that is both fit for purpose and embraces TCF principles at its heart.

A third area for debt risk management centres on the requirements of Basel III. Whilst elements affecting sovereign debt are largely beyond control, ensuring that the correct spread of risk is applied across the banking business as a whole in terms of funding, lending and collection/recovery operations, demonstrates to the regulators that banks are establishing counter-cyclical buffers that are robust and effective.

Moving forwards, the purchase of unsecured consumer debt is certain to rise again, but in such a way that dovetails with the medium-long term strategies of the banks, thus making it a more sustainable and less risky proposition. Compliance is sure to figure high in the agenda too, and it is likely that standardised compliance procedures will eventually emerge. As the effects of Basel III really take hold, the demand for debt collection products and services will evolve, and the industry needs to be ready to respond.

Ultimately, if consumers suffering from debt issues can be rehabilitated and converted back to live and secure status, then the industry has done its job, and business across the board will benefit. Wescot Credit Services knows that continued strategic engagement from the debt collection community will be essential in delivering innovative solutions for client business models that support and embrace these changes.