The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Soaring living costs and higher taxes are increasingly being blamed by struggling borrowers for why they cannot meet their obligations, debt collection agencies disclosed yesterday.

Rory Higgs, managing director of Apex Management Services, told Tribune Business that his company is distinguishing between credit delinquents who are unable to fulfill their commitments and those who can pay but simply choose not to.

“One of the problems that we face as a debt collection agency is there are always persons out there who are willing but unable to pay, and we can work with those persons who are unable because of whatever hardships they face,” he said.

“But you still have a pocket of the market, or the community, that are able to pay but they’re unwilling, and those are the ones we warn that if you don’t come in and co-operate, we will use every possible means to get you to fulfill your obligations.”

“A lot of times credit is granted without proper documentation or due diligence and, in a lot of cases, we have persons who don’t have proper contact information for the persons who owe them. They don’t have proper contractual agreements with the persons who owe them. It’s a rush to grant credit in a lot of cases, or to allow persons to owe, but if the necessary documentation is not in place it makes it difficult for a collection agency to operate or do what they need to do effectively,” Mr Higgs added.

“Most times credit is granted in good times and you don’t make proper provisions for the back end in the event of a delinquency. So without doing proper due diligence or screening at the front end, you suffer at the back end because you’re not paying too much attention to the downside.

“We have a substantial uptick in recoveries, but we’re still faced with persons who are now complaining about the inflation that is prevalent in the country. Although persons are now back to work they are still faced with having to stretch their dollar so they can meet all of their obligations.”

Higher taxes are another factoring behind persons being unable to pay their debts as disposable income is dwindling. “We find that taxes are also something that eats into disposable income. So, for us to get paid, there are certain obligations that are more of a priority than unsecured debt,” Mr Higgs said.

Samantha Williamson, managing director at Optimum Management Services Limited, said: “Persons are still in delinquency trying to maintain their payments. But you also have variations of prioritising debt, as some persons take the opportunity of settling. Sometimes clients allow customers to settle at a lower rate rather than taking a payment plan option and paying over a long period of time.”

The “bottom line” for debt recovery agencies is that people decide to neglect their obligations and do things other than repay their creditors. “Bahamians just decide to spend their money where they want to and forget about who they owe. It’s the mentality of the people,” Ms Williamson continued.

“Taxes have been there for years and it’s not like they just popped up all of a sudden. We should be used to the taxes, but the cost of living has gone up and, if that has gone up and people’s salaries have remained the same, then of course there will always be a challenge in paying their bills.

“I don’t think the taxes are affecting their debt ratio in terms of collections. It’s just that sometimes persons have different circumstances. Some people lose their jobs and, a lot of times, persons just relocate and once the bank is not able to reach them they stop making payments.”

Many people have been “in transition” as a result of COVID-19, especially in Grand Bahama and Abaco due to the additional impact of Hurricane Dorian. Ms Williamson said banks are being “more reserved” in who they lend to and are trying to “clean up bad debt accounts”.