Bad credit risks on rise
PA Wellington New Zealand was becoming a credit society where more than half of the adult or working population could become bad credit risks. That is the view of Mr Keith McLaughlin, director of Baycorp Holdings, Ltd, which has become the first debt collection agency to be publicly listed on the Stock Exchange.
While the New Zealand consumer was faced with high interest rates, the debt collecting industry was experiencing a booming trade, he said.
The number and value
of debts given to the Baycorp agency in the Hutt Valley had risen strongly over the last 12 months and in May alone there were 9434 new debtors listed, with debts of $4.2 million. “That figure far exceeded anything in the previous history of our company,” said Mr McLaughlin. “The growth rate from month to month is quite phenomenal.” About $4.5 million worth of debts are placed with Baycorp to recover each month.
“We’ve been monitoring growth over the last three
or four years in particular, and the potential for growth in oiir industry, in my opinion, is unrestricted.’’
Mr McLaughlin said there was an alarming number of genuine people in the community who did not know what to do with their short-term cash flow problems. He pointed the finger directly at high interest rates as the cause for many people’s financial predicament Young families buying their first home were often caught out having first budgeted to meet payments at
lower interest rates. “It used to be every New Zealander’s dream to have a mortgage-free house. Today you’re told you’re silly because you’re not keeping up with Inflation,” said Mr McLaughlin. “I think the whole circle in New Zealand has turned to be a credit society. As a consequence of that I don’t really feel that debt collectors will be out of business.”
A common myth was that going bankrupt was the easy way out, but while it might be a short-term solution, the consequences in the long term were far reaching.
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Press, 9 July 1986, Page 34
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336Bad credit risks on rise Press, 9 July 1986, Page 34
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