Some may argue that the ongoing Covid-19 pandemic is as much an economic crisis as a public health issue, but what is the reality of UK debt due to coronavirus?
As lockdowns and forced closures hit the UK, the Government spent billions to support affected businesses and workers through the crisis. The furlough scheme began in March and is due to run until the end of October, but it is by no means a full solution.
Many individuals have been hit by financial hardships due to the Covid crisis, with redundancies on the rise and whole industries – such as travel and the arts – effectively at a standstill.
For individuals this could mean the debts are piling up, and for lenders it means new strategies may be required to manage rising household debt.
UK Debt Due to Covid: How Much will Households Owe?
According to a study by debt charity StepChange, as of late May, 4.6 million people had been negatively affected by the ongoing crisis so far. The accumulated total of £6.1 billion of arrears and debt averages to £1,076 in arrears and £997 in debt for every adult affected. Common areas of increased household debt include:
- Council tax
Customer service not only plays a vital role in debt recovery, but also for customer retention. Understanding changing customer needs is key to effectively supporting those financially affected by coronavirus, as many will be facing new and unpredictable financial stresses.
One key challenge lenders will have to overcome is that, due to increased demand for collections and arrears management, existing services will be under pressure. Outsourcing debt management could be a cost-effective solution, and a trusted servicing provider like Target can also help improve the customer journey.
Servicing Solutions for the Future, Whatever it Holds
New challenges call for innovative solutions, and that’s where we come in. At Target, we can offer deep domain expertise, specialist skills and knowledgeable agents. Find out how we can support you with collections and arrears management.