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Debt Collection

One in three people prefer to deal with debt online

By CreditMan Tuesday, December 1, 2015

People struggling with debt prefer to create their repayment plans online to help manage their borrowing commitments.

The latest research from Experian highlights a growing trend for individuals who want to settle their debt without having to talk to anyone they owe money to. This is, in part, to avoid confrontation and take back control of their finances.

The three most popular options among UK adults when it comes to dealing with unmanageable debt are:

  • nearly one in three (32%) would prefer an online option as their first point of call for a repayment plan following a missed payment

  • going into a branch to discuss repayments face to face is what 23% would choose

  • for 20%, the preferred option is to do this over the phone

The convenience and ease of online planning is the main reason that people would opt for an online route (62 %). However, a desire to simply avoid stressful phone calls, letters and conversations are also popular reasons for going online.

Nick Grant, Business Development Consultant from Experian’s Decision Analytics, commented:

“We help organisations to treat their customers fairly when it comes to the sensitive issue of debt. The majority of people struggling with debt actually want to somehow regain control of their finances. However, during what can be a very stressful and emotional time, the fear and embarrassment of speaking to someone about their debts can be barriers to taking those first steps to recovery.

“Organisations using emails, or even text messages, can engage a person and direct them to a portal where they can make a payment, set up a payment plan or complete a financial assessment at a time convenient to them. It also increases the likelihood of a payment arrangement being kept.”

When broken down by age, the findings reveal some disparities in the preferences of UK adults. Unsurprisingly, over-55s favour speaking to someone in branch with almost a third (29%) of over 55s opting for this route as a first choice, compared to 22% choosing to go online.

In contrast, those aged 35-54 much prefer addressing their outstanding arrears online (36%), and they are also the group that shun face-to-face contact the most, with over a fifth (22%) choosing a phone conversation compared to 18% going to a branch.

Nick commented:

“It’s understandable that most people prefer e-mail, text, web chat and self-service options. That’s not to say that traditional letter or telephone based methods don’t work. Understanding the best way to communicate with each individual, as well as what they can afford, will ensure the right outcome for those in debt, as well as the organisations trying to recover those debts.

"For those in financial difficulties, often a good first step to take is to seek advice from organisations such as National Debtline, Citizens Advice and StepChange Debt Charity, who can help them understand what their options are. It is important to remember there is always support.”

For more information about how to plan a fair and effective collections strategy, please see the Experian whitepaper here.