Debt figures grim - Baycorp

A grim picture of Kiwi debt has been painted in new figures by debt collection company Baycorp.

The company has seen increases in unpaid debt across the board, from mortgages through to library fines and private school fees.

Baycorp holds between 35 and 40 per cent of the debt-collection market.

The size of the average debt the company was asked to collect increased 47 per cent from the start of the recession - from $554 in 2006 to $814 in 2009.

The largest amount was owed to financial institutions and banks, where average unpaid debt is about $4400, up from $3100 in 2005.

Baycorp chief executive Geoff Harper said New Zealand debt had grown in three directions.

"It's growing in the number, in size of debt, and in the quantum of debt."

Harper said the first influx of debt Baycorp saw at the start of the economic downturn was personal, which was then overtaken by business.

He said businesses' attitudes to debt had changed markedly in the past 18 months as companies needed to recover money owed to them to pay their own debts.

"It's really the Darwin theory operating in business: survival becomes the driver ... it's a food chain."

He expected current trends to continue until the end of 2010 but questioned whether Kiwis had learned from the experience.

"I think unquestionably people will be more risk averse but, as history has shown, we do forget our experiences very quickly."

To enable the company to contact its higher number of debtors, Baycorp is using new computer-based dialer technology which works weekends and nights, and is capable of leaving messages on answer phones and sending text messages.

Baycorp New Zealand general manager Joe Nel said as well as having higher levels of debt, many debtors had run out of payment options and were forced to pay back small amounts over a longer period.

"[Before] they would have said, 'I'll increase my mortgage, I'll get a debt consolidation loan, I'll speak to my family.'

"All those kinds of conversations aren't happening any more, the banks are reluctant to increase mortgages, parents don't have the money.

"So now it comes down to 'I will pay you $50 a month', and maybe two years ago it would have been $100 a month."

Nel said the combination of unemployment and bad debt had combined to create a difficult few years for Kiwis.

"New Zealand has really been hurt by the recession.

"People have lost their jobs, have reduced income, and have probably been over-indebted, quite frankly," he said.