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Saturday 25.11.2017 | Name days: Kadrija, Kate, Katrīna, Trīne

Amount of businessmen debtors decreases in Latvia

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Latvian-of-Court Debts Recovery Association Chairman Agnese Priedite

The amount of debtors in the sector of legal entities has decreased, BNN.LV was informed by the Chairman of the newly founded Latvian-of-Court Debts Recovery Association (LOCDRA) and Intrum Justitia director Agnese Priedite (Agnese Priedīte).

It can be explained not by improving of the situation in the market, but by the adoption of the participants to it. At the same time the head of the debt recovery association indicates that the amount of debtors among private entities could increase in autumn, because of the heating season start. She also tells about the new association, where the leading debt recovery and credit management companies have united – SIA Creditreform Latvija, SIA Paus Konsults, Lindorff Oy Latvijas filiāle, SIA BaltRisk, SIA Intrum Justitia. She explains that the association to a great extent will operate as debt recovery lobby.

What is the newly founded LOCDRA and what are its aims?

The main aims of LOCDRA is to participate in debt recovery industry regulatory legal framework development and improvement. It also represents the common interests of debt collection companies in state power and management institutions, as well as, social and international institutions. We will also inform the society about the latest trends in debt recovery market, protect the interests of creditors and develop and maintain the understanding of the society of Latvia about the principles of debt recovery industry work.

One of the main tasks of the association is also dispelling of myths and promoting of understanding of the society regarding both: the debt recovery industry and attitude towards creditors and debtors, as well as the debtors attitude towards his liabilities. We put great emphasis on education of educators about their rights and responsibilities and possibilities to reach a common agreement of how to settle the accounts. It can be said that the association will be as a lobby of the industry.

What are the debt collection industry tendencies you could forecast for near future? Will the amount of debtors decrease?

Currently the amount of debtors has stabilized – the growth curve is not so rapid as before. Growth of debtors is expected among private entities in autumn due to the beginning of the next heating season. However it is difficult to forecast whether it will be rapid.

The amount of debtors among legal entities has decreased though. It can be explained not by improving of the situation in the market, but by the adoption of the participants to it. Many enterprises evaluate their collaboration partners more carefully, they ask for pre-payment more often and the amounts paid after are not so big any more as they were in, for example, 2008.

What are the revenue of debt recovery industry in Latvia? Do you have any data on the leading debt recovery companies in Latvia? Where are they and what is the turnover of six months of the largest ones?

The members’ of the association last year’s overall revenue formed 4.9 million lats. In 2009 45 000 cases or unpayed bills were submitted for debt collection in B2B sector (legal entities); the total sum of them comprise almost 52 million lats. In the sector of consumers in the same period, 380 000 cases have been submitted with an overall sum of 104.66 million lats.

How do you evaluate the fact that debt collectors have started to search for debtors in social networks?

That is true that there are companies that practice this. We as an association do not neglect that.

It must be emphasized that this way of communication is only used when the debtor has not responded to any other effort to reach him or her. First of all the debt collectors try to reach debtors using the contact information they have indicated in the contract. It is important to understand that the objective of a debt recovery company is to solve the situation – to communicate with a debtor and to mutually agree upon possibilities to repay debts. If one has made information public in social networks, then communication with him or her in such a way cannot be considered unethical. There have been situations when this is the only way how it is possible to reach a debtor.

Before communication with someone, the debtor is identified after all the information possible to make sure that the right person is addressed. Moreover when communicating for the first time, no confidential information connected with the debt, is revealed. It just requests to reach the specific debt recovery company.

Companies that practice searching for debtors in social networks indicate that the contribution of this is felt, because there are many people that have simply forgotten about the debt, or they have not paid it because of financial reasons. Usually they are not avoiding paying debts on purpose. Most of debtors try to solve the situation and a comparatively small number of them do not pay debts on purpose.

How do you evaluate the competition in the industry of debt recovery in Latvia? Honest, tough or not fair?

The competition is tough. It is a positive fact, because debt collectors think about improvement of their activities, promotion of efficiency and quality of services. Currently there are about ten large industries operating in the industry. There is also a great amount of small companies that identify themselves as debt recovery companies.

How could the market change when the number of debtors reduces? Consolidation? Disappearance of small participants?

It is likely that the small companies would leave the market; however it should be noted that the leading debt recovery companies deal not only with debt collection, but also other credit management services that can compensate for small revenue from debt collection.


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