The aggressive tactics of debt collectors have left four in ten of their targets fearing for their lives, according to research.
A poll, of 1,000 adults in problem debt, found half (50%) don’t feel they have been treated in a humane way by the businesses they owe money to – while one in three (32%) have had a “rattling” experience with bailiffs knocking on their doors.
More than half (52%) have had to take out further loans, landing themselves in more debt to keep collectors at bay – with 46% left feeling anxious, and 12% trapped by the situation.
The research also found having such a negative experience as a customer has seen 21% make a formal complaint to the debt collection company, and 18% stop using that business.
More than one in ten (12%) have left bad reviews online, and 11% post complaints on social media.
Amon Ghaiumy, founder of ethical debt resolution technology company, Ophelos, which commissioned the research, said: “With more people than ever falling into problem debt, sometimes for the first time in their lives, businesses cannot afford to ignore the abhorrent behaviour employed by external debt collectors.
“Not only does this worsen the impact of debt on consumers, but in the current cost of living crisis, this unethical approach is what will leave a lasting impression on millions of people.
“The fact is that people are going to blame businesses and lenders for the huge impact that bad debt collectors have on their mental and financial health.
“It begs the question of businesses: how do you want to be remembered when we come out of the recession?
“The actions they take in today’s crisis will be remembered – and that means they simply cannot let this behaviour become the face of their business.”
The study also found that a quarter of those polled have spoken to friends and family about managing their debt, and 50% have ended up borrowing money off friends in order to pay off loans.
Another 41% have reverted to overdrafts, and four in ten have turned to family to help.
But a year ago, 40% of respondents didn’t expect to be in problem debt like they are now – unable to pay household bills, council tax, and energy bills.
And more than a third (36%) believe that, if nothing changes, they will still be in the same situation – if not worse – by this time next year.
It also emerged credit cards, energy bills, and rent are where most adults currently have outstanding debt.
But one in five (21%) have got no savings to cover costs for unforeseen expenses, while 18% said their salary doesn’t cover their outgoings.
And although more than half (52%) are hopeful they won’t go into further debt, they think energy bills (64%), water bills (60%), and food prices (47%) might make this difficult.
The research, conducted via OnePoll, also found the average person in debt has £5,492.50 outstanding, typically owed to four companies.
Amon Ghaiumy added: “It's becoming more common than ever to be in debt, and it's not because people are “choosing not to pay their bills” – it's because they simply can't.
“It’s outrageous that one in five people are having to go into debt to afford basic necessities like groceries and medication.
“More needs to be done to help those in this financial crisis. Businesses need to better help support their customers through this hugely difficult time, rather than letting their debt get worse or spiral out of control.
“Bombarding someone with threats won’t make the situation any better. With the right tools and an empathetic approach, resolving debt doesn’t have to be a scary situation if it is dealt with properly.
“And for individuals, it’s important to always seek support when in debt, even if you are unable to pay it off, and not suffer in silence – there is always advice or someone out there who can help.”
MAIN CAUSES OF PROBLEM DEBT AMONG THOSE POLLED:
- Credit card
- Energy bills
- Rent
- Overdraft
- Mortgage
- Council tax
- Buy now, pay later
- Short-term loan
- Long-term loan
- Large item loans (i.e. furniture, white goods)
SIX THINGS BRITS CAN DO IF STRUGGLING WITH DEBT:
- Speak to your creditor – if you're struggling to pay your bills, they may be able to offer or direct you to further support.
- Engage with your debt collector – ignoring calls or letters could lead to further charges or legal action against you. Should you experience harassment, seek advice from organisations such as Citizens Advice.
- Consider installment payments – paying off your debt in installments through your creditor may help make your debt more manageable.
- Ask about breathing space – the Government’s Debt Respite Scheme can give you protection from creditor action for up to 60 days.
- Explore grants – a number of organisations have established support funds to help individuals struggling to pay off their debts.
- Seek free advice – charities such as StepChange, Citizens Advice, and the Debt Advice Foundation can offer free, impartial debt advice.
