Early engagement can reduce the costs of debt repayment.

Early engagement can reduce the costs of debt repayment.

Following on from its recent Debt Awareness Week initiative, which was publicly supported by many CIVEA members, leading debt charity StepChange has published a new report this month on the impact of COVID-19 on household debt. This report indicates that some people have experienced a fall in income that has affected their ability to meet day to day costs. This is why CIVEA member firms continue to urge people in debt to respond to calls, emails and letters at the earliest opportunity.

By engaging early, debtors increase the chances of getting help to repay debts and reduce the chances of facing higher charges at a later date. Enforcement is the final stage of debt collection, in which the court has issued a warrant or order instructing an enforcement agent to take control of goods in lieu of payment. The charges for enforcement services are set by government and designed to encourage early engagement to avoid increasing the overall debt. The Notice of Enforcement sent at the Compliance Stage explains how and when to pay, as well as the extra charges that could be applied if payment is not made. It gives at least seven days advance notice before a doorstep visit. The notice also includes contact details for the enforcement agency and options for free debt advice. Details of the fixed fees that may be payable can also be found on StepChange’s website.

Don’t enforcement firms benefit from additional charges?

There is a common belief that it is more beneficial for enforcement firms if cases are delayed so that higher charges can be added to a debt. However, this is not the case because the fixed fees have not been increased since 2014 to reflect the additional costs of enforcement visits, such as technology and, more recently, protective equipment. The later stages of enforcement are costly to the firms and also impacts the likelihood a debtor will be able to quickly resolve their debt. This is why in over 50 percent of cases, debts are recovered during the initial Compliance Stage without a visit, often in instalments through affordable repayment plans.

Conducting visits, especially with the self-imposed health and safety measures, is an expensive operation for enforcement firms to undertake, and adds to the total debt that is owed. Enforcement firms must employ agents to undertake visits, hire vehicles and equipment, operate sophisticated tracking software and provide body-worn video cameras with back-office monitoring. It is far less costly to resolve a case at the Compliance Stage, which also increases the chances of the case being resolved. The smaller the total payment required, the higher the chance a debtor can find an affordable and sensible way to pay their debt off.

Why not get rid of visits altogether?

There will always be a need for enforcement visits as some people will continue to deliberately avoid making payments, despite being able to afford to do so. It is an unfortunate reality that in some circumstances, a home visit with the prospect of losing valuable possessions, such as a car, is the only way that some people will face up to their responsibilities. Enforcement is complex, highly specialised, and essential work that is needed to recover lost revenue for local and central government.

Our shared industry ambition has always been to recover funds from those who can afford to pay but are making the choice not to. CIVEA and its members understand the challenges for those in financial hardship, especially given the impact of Covid, and will always support customers who are vulnerable or are struggling to pay their debts. The enforcement process is designed to be firm for those in debt and fair for charge payers that fund local services. Enforcement Agents are trained and instructed to identify safeguarding or vulnerability needs and refer these cases to specialist welfare teams immediately.

CIVEA believes that encouraging early communication from debtors, whether that be through debt advice charities or enforcement representatives, can only be beneficial to all involved.

To ensure fair treatment of people in debt, the enforcement process will continue to encourage early engagement at every opportunity and to help people affordably settle their debts quickly without additional charges.

For more information on the enforcement process please view our video ‘CIVEA Guide To Enforcement’ or visit our FAQsection.