Heavy debt collection regulation deteriorates access to credit

A May 2017 paper by the University of Princeton and the Federal Reserve Bank (USA) named “

Access to Credit and Financial Health: Evaluating the Impact of Debt Collection

” acknowledges that 

debt collection

 regarding 

consumer credit

 is heavily regulated in the USA. Moreover, there are differences in regulations from one to another State.  The paper compares these differences and relates them to the ease of access to consumer credit. The authors conclude that: “

We find consistent evidence that restricting collection activities leads to a decrease in access to credit and a deterioration in indicators of financial health. Moreover, our estimated treatment varies considerably with the borrower’s age and baseline credit score, with effects concentrated primarily among borrowers with the lowest credit scores.”

Such conclusion meets a logical reasoning and is like analogous reasoning on other matters such jobs creation where excessive employee protection leads to excessively prudent employers. It seems to us that the Belgian political world does not encourage 

amicable debt collection

 despite its proven track record on the benefits of dialogue and solutions agreed by parties. Statistics prove that debt collection companies solve millions of claims with hardly any claim (much less in fact than in other activities that should be less prone to disputes). The reality shows that amicable collection entails maximal return to creditors at minimal costs.  However, Belgian politics favours courts solutions, ignoring that these are far more aggressive, tiresome, slow and onerous; for both creditor and debtor; and put an unnecessary burden on the budget of the department of Justice. We invite Belgian MP’s to consult us to develop policies better adapted to the daily reality.   You wish an efficient though corporate mage saving solution? Don’t hesitate to contact us at 

sales@tcm.be

 or by phone: +32 16 74 52 00.

A May 2017 paper by the University of Princeton and the Federal Reserve Bank (USA) named “

Access to Credit and Financial Health: Evaluating the Impact of Debt Collection

” acknowledges that 

debt collection

 regarding 

consumer credit

 is heavily regulated in the USA. Moreover, there are differences in regulations from one to another State.  The paper compares these differences and relates them to the ease of access to consumer credit. The authors conclude that: “

We find consistent evidence that restricting collection activities leads to a decrease in access to credit and a deterioration in indicators of financial health. Moreover, our estimated treatment varies considerably with the borrower’s age and baseline credit score, with effects concentrated primarily among borrowers with the lowest credit scores.”

Such conclusion meets a logical reasoning and is like analogous reasoning on other matters such jobs creation where excessive employee protection leads to excessively prudent employers. It seems to us that the Belgian political world does not encourage 

amicable debt collection

 despite its proven track record on the benefits of dialogue and solutions agreed by parties. Statistics prove that debt collection companies solve millions of claims with hardly any claim (much less in fact than in other activities that should be less prone to disputes). The reality shows that amicable collection entails maximal return to creditors at minimal costs.  However, Belgian politics favours courts solutions, ignoring that these are far more aggressive, tiresome, slow and onerous; for both creditor and debtor; and put an unnecessary burden on the budget of the department of Justice. We invite Belgian MP’s to consult us to develop policies better adapted to the daily reality.   You wish an efficient though corporate mage saving solution? Don’t hesitate to contact us at 

sales@tcm.be

 or by phone: +32 16 74 52 00.