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The Warsaw Voice » Business » September 17, 2008
Debt Market
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The Repo Man Cometh
September 17, 2008   
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Until recently, many people in Poland associated debt-collecting companies with muscular men knocking on debtors' doors to "amicably" recover the money. Though the methods used in the debt-collecting business have changed substantially, this is still not a job associated with social prestige.

Even the smallest incidents can cast a shadow of mistrust over the whole sector. The media often contributes to the atmosphere of pity and compassion for debtors struggling to fend off "ruthless" debt collectors. Hearing these stories, we tend to take the side of those who may be simply dishonest and incur debts even though they know full well they will never be able to pay them back.

It is not until we become creditors ourselves that we begin to look differently at the problem and think about hiring a debt-collecting company. When we look more closely at the methods such companies use, we may have to redefine our previous views. It turns out that it's worth asking experts to handle debt collection, not only because acting on your own may simply fail to produce the expected results, but because it may lead to even bigger problems.

Debt market insiders say that the amount of work handled by debt collectors has decreased recently. Why? One reason could be growing wages, but also people taking out new, readily available loans to cover old debts. Price hikes that are imminent in areas such as electricity, natural gas, gasoline, coupled with rising interest rates, could well halt the flow of repayments, leading to a flood of new orders for debt-collecting companies.

The debt collecting sector has been subject to major changes over the past few years. First of all, these companies have become a permanent fixture on the Polish financial market. It's hard to imagine present-day banking or mass-scale services such as telecommunications without debt-collecting firms, which have become a part of these organizations' customer service processes.

The rapidly developing securitization of liabilities-the process of converting debt into securities-also requires the involvement of debt-collecting companies. Securitization involves issuing securities on the financial market on the basis of a given company's assets. These may be customers' debts, merchant credit granted, loans and other income. Banks have the greatest freedom in this area, as they can securitize almost all their assets, from credit card debts to car loans and mortgages. Registering a securitization fund brings an organization halfway to a full securitization transaction. This is where the debt-collecting company comes to recover the liabilities purchased by such a fund.

Overall, the era of those infamous "amicable gentlemen" is over. Today debt collecting is a serious business in Poland and the main players on this market are companies with substantial capital. It's time to accept the fact that debt-collecting firms have become a part and parcel of your business life.

Agnieszka Wiśniewska

It is not until we become creditors ourselves that we begin to look differently at the problem and think about hiring a debt-collecting company.
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