Generally speaking, the aftermath of Brexit will touch industries beyond just banking, if the financial sector is taken into account. It will also send ripples in the debt management sphere. However, as per trends from the previous year across the European markets, few predictions can be made and these very facts have been dealt with in this write up in brief.
Areas of “potential impact”
As a result of Brexit, these are the main areas that might face the impact, regardless of whether it is negative or positive for the common man.
- As far as collection rates are concerned, it is being anticipated that these could be lower and the same applies for both, “outsourced collections” as well as “purchased debts”.
- Since it is likely that the economic growth will be slow, the incidence of loan defaults will be higher or at least is likely to be higher as compared to other times of the year. This would eventually lead to so called higher instances of “defaulted debt”.
- Creditors are likely to shift their focus on dealing with the consequences of Brexit and this could result in lower incidence of selling defaulted debt.
- It is also being anticipated that there might be a shift in focus by lenders and they would deal with lending that pose lesser risk. And this in turn would ensure that the percentage of outstanding debts also reduce in number.
Experts are of the opinion that during this period, default rates are likely to increase, which eventually gave rise to “backlog” of debts that have been written-off. In fact, the mode of collection itself posed to be a problem in recent years.
“Flattening out” of collection curves were pronounced as compared to lower collection rates. “Debt-for-sale” reduced remarkably since debt purchasers were not ready to pay up.
Experts also imply that following Brexit vote on debt management business in UK, the impact is less pronounced as compared to the scenario that resulted from credit crunch. Also, the rules for lending have been stringent so the impact is likely to be less pronounced.
Most importantly, the lending market in UK is much more robust and has a good stronghold. Not only that the business identities that are into lending are also more “robust”. It is also being said that the impact will be less likely inside United Kingdom and the ripple effects will be more pronounced outside UK following Brexit. As such, it is being assumed that the debt management market in UK will not be impacted severely owing to its robust nature.
Money management tips during credit crunch
Despite the fact that there might not be severe impact in UK following Brexit vote in the near future, there is no harm if you save for the rainy day. Given below are few tips for the same.
Better money management tips
Check out the following tips of better money management strategies. These are as follows-
- If you are using plastic cards, do so judiciously. Try to avoid these plastic cards as much as possible. Buying goods especially your daily needs items with cash will help you to spend less.
- Avoid availing instant payday loans unless you are in dire need of it. And if you happen to opt for one, make sure you adhere to the repayment period.
- Budget your expenses. It is always better to spend according to a plan. Work out a budget and keep an account of your expenses
- Remember, whatever financial decision you take is reflected in your credit report so you have to handle your finances accordingly.