Digital debt recovery could be the alternative to bailiffs

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Think of bailiffs and the chances are thoughts will turn to payday loans, dodgy lending and people who have borrowed beyond their means.

But that’s not always the case. Figures show increasing numbers of local councils are turning to debt collection agencies to help them recover money – meaning it could be something as simple as an unpaid council tax bill or traffic fine that brings the bailiffs to the door.

In an era where councils are facing unprecedented cuts to their funding, but debt recovery is not seen as a frontline policy priority, the outsourcing approach seems logical. The most recent figures available show that authorities in England are currently owed around £2.8bn in outstanding tax – a significant sum which could greatly boost council coffers if recovered.

However, research carried out by ourselves shows that there could be hidden risks to this approach – many councils simply do not know whether their recovery strategy is cost-effective. Of 109 councils surveyed, 68% were unable to say whether the costs of collection exceeded the amounts recovered.

The human cost

The prospect of bailiffs turning up at the door can cause huge stress and anxiety to debtors, many of whom may be facing financial difficulties due to existing health conditions. A report released by Christians Against Poverty last week found that 41% of people they helped, who owed money to local authorities, were likely to have considered suicide as a way out. And 55% of those they help have mental ill-health.

It’s an extreme case, but no-one involved in debt recovery could fail to have been affected by the case of Jerome Rogers, a 20-year-old motorbike courier who took his own life after being pursued by bailiffs employed to recover money he owed to Camden Council for two minor traffic offences.

Jerome’s story was highlighted in the recent BBC drama Killed By My Debt and was a powerful reminder of the stress and anxiety that can be caused by these ‘traditional’ methods of debt collection.

Whilst the coroner concluded that the bailiffs, in this case, did not act unreasonably, it begs the question whether this is the right method to use to recover what began as a mere £130 of traffic fines. The Government has stated before that bailiffs should be a last resort, but what’s the alternative?

Digitising the debt collection process

In a tech-savvy world where over 80% of the population (91% of 18 to 44-year-olds) now have a mobile phone, there is an opportunity to engage much more effectively.

Using digital solutions to aid debt recovery means people can pay around the clock and do not necessarily have to speak to someone on the phone – a factor which we know can affect those who feel judged or ashamed to be in their situation.

Councils that we have worked with have seen great results from engaging early, in a way that people understand and can respond to without fear of judgement. Giving people the opportunity for a two-way conversation at an early stage can prevent problems spiralling out of control and increase recovery rates – potentially making this not just a more morally-acceptable alternative to bailiffs but also a more cost-effective one too.

To read Esendex’s full report into the future of local authority debt recovery, click here.

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Sean Sutton

I'm the Head of Public Sector for UK and Ireland, helping our team of experienced professionals provide industry knowledge, expertise and ultimately value to our customers.