Baycorp chief Geoff Harper says all age groups are taking longer to pay off debt. Photo / Janna Dixon
Recession makes debt collection more challenging for agencies such as Baycorp
They might be property-rich, but figures from debt collection agency Baycorp suggest baby boomers are racking up increasing debts.
The agency reports a rise in debts belonging to people aged 45 and over, with a slight decrease in referrals from younger age groups.
Geoff Harper, chief executive of Baycorp, said
55 to 66-year-olds were struggling to clear their debts.
That age group owed an average of $1212, an increase of 20 per cent since last year and almost twice the 2005 figure, he said.
Harper said younger age groups usually had lower credit card limits than baby boomers.
Younger people also had more flexibility to change their lifestyle in order to clear debt, he said.
"[Younger people] are more transportable and if they are prepared to pay their bills they can find a way to achieve it.
"The young person can pick up sticks and go and work in the snowfields in Queenstown or something like that and work their debt down."
Baby boomers have the least flexibility of any age group to address their debts, Harper added.
He said all age groups were taking longer to pay off debt.
"Only about 10 per cent of debtors are paying their debt in one full instalment compared with nearly 20 per cent the year before."
The average debt for people under 25 had reduced by 3 per cent to $611, and the highest percentage of debt (22 per cent) came from the 26 to 35 age group, according to Baycorp's figures.
Harper said there had been a strong demand for commercial debt collection and summary judgments (when a debt was acknowledged by a court) had increased by 200 per cent this year.
Despite the increase in business for Baycorp, it was a challenging environment to run a debt collection agency in, he said.
"If people are finding it more difficult to pay money then we're having to be more empathetic.
"We're having to listen more closely to a range of stories.
"So in many ways the volume has increased for our business, but at the same time we've had to work much closer with a bigger range of debtors than we've had to for many years."
The recession had made both businesses and consumers more aware of the dangers of debt, Harper said.
"Credit policies have been tightened and consumers have become more gun-shy about taking on new debt."
