How to drive up the cost of borrowing for the poverty stricken

19th February 2015

A bit of thinking beyond “Round one” and the “bleedin’ obvious” might have revealed that:

- Many small traders and businesses are Maori and Polynesian. They need their bills paid to stay in business

- Now the incentive is to take greater security over more things one can re-possess

- So expect the list of “things which can be re-possessed” to get longer

- And / or to increase the interest rate penalty for bad payers to cover the new situation

All ways round this drives up cost to both parties while only helping enforcement by a minimal amount.


The Radio NZ News Website reports as follows:

Debt collectors will soon have to have a licence if they want to repossess goods from people who have not paid their bills, and what they can take will be restricted.

From June, when debt collectors enter a property, they will only be able to take valuable items that have already been listed on a lending contract. Agents will also be stopped from taking important items like beds, or kitchen equipment.

The chief executive of Mangere Budgeting and Family Support Services, Darryl Evans, said his organisation had heard many horror stories about what's have taken.

"I've heard of people losing their beds, losing the microwave or in an extreme case I heard of somebody losing the stove. "With many of our Polynesian and Maori families cultural items such as mats and taonga, things that have significant value to the family."

He does not believe that people will be less inclined to pay their debts when some essential and treasured items are no longer up for grabs.

"Overwhelmingly I believe people want to pay, but unfortunately life happens, people lose jobs, they have reductions in working hours, or something has occurred so that they are not able to meet their obligations.

"Ninety percent of families we work with are committed to meeting repayments."

A company will pay $616 and a sole trader $510 to get registered and they will have to update their licence every five years. Those who breach the new rules could be fined up to $40,000.

Commerce and Consumer Affairs Minister Paul Goldsmith said the change was prompted by reports of unscrupulous practices in the industry.

But Ian Caddis who is general counsel for the debt collection agency Credit Link, said the changes would make no difference to dodgy operators.

"The people who are doing it unlawfully are generally the gangs, gangs are out there to do reposession work.

"They get rapid results - because they get rapid results they are attractive to potential clients, particularly desperate ones like smaller traders who are desperate to stay in business."

The Government does not hold figures on exactly how many agents or debt companies will need to be licenced by June, but Mr Goldsmith said he was confident everyone will be processed in time.

"We have the ability to give a temporary licence if people's full consideration has not gone through," he said.

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