Debt levels rising for boomers

Debt levels rising for boomers

The recession seems to be lingering on if debt levels are anything to go by.

New figures from collection agency Baycorp reveal debt levels among baby boomers are still rising while repayments rates are slowing.

There has also been a higher number of debts referred to the company for all age groups above 45 while there has been a slight decrease for younger age groups.

Baycorp figures show the average debt placed for collection is now $868 whereas a year ago it was $832, an increase of four per cent.

However, with an increase of only $43, the average debt growth rate has slowed from the 2008-09 years when it was $144.

Debtors have also been better at living up to their promises with 43 per cent keeping their word about repayments, up six per cent from last year’s lowest rates.

Baycorp CEO Geoff Harper says the recession is proving hard to shake off for many people.

“It seems the 55 to 66 year olds are struggling to rid themselves of debt,” Mr Harper says. “On average they owe $1,212, an increase of $243 over 2009 and almost double what they owed in 2005 ($696).

“On top of that everyone is taking longer to pay off debt where only about 10 per cent of debtors are paying their debt in full in one instalment compared with nearly 20 per cent the year before.”

Mr Harper says the figures reveal we have been through the darkest recessionary patch and we are now picking ourselves back up and ready to get back to business.

“I would say that there has been a shift in attitudes. Credit policies have been tightened and consumers have become more gun-shy about taking on new debt.

“In general, you could probably say that people are not as likely to take on new debt for luxury items and will only seek credit when it is a necessity. For example, the family might not need a new flat screen TV but they do need a new washing machine when the old one breaks down.”

The average debt for people younger than 25 has reduced from $628 to $611 and in general the highest percentage of debt (22 per cent) comes from those aged 26 to 35. The average debt for everyone older than 35 has increased while across all age groups, the average debt is $868.

There has also been a particularly strong demand for commercial collections and summary judgements have increased some 200 per cent this year alone, Mr Harper says.

“It would seem businesses need to be stronger and more proactive in their credit policies to get their own money in so they in turn can pay their debtors, especially in the SME market, where one bad debt could spell the end of a company. It can often be a domino effect, where one company is relying on payment of another who is relying on payment of another, and so on.”

ENDS

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