Bad debt increases at unprecedented rate

Fri, 15 May 2009

The number of firms being chased for bad debt is increasing at an unprecedented rate, according to debt recovery firm Lovetts.

Lovetts says the total value of claims being taken through the courts by Lovetts on behalf of its clients in Q1 this year up 97% on Q1 2008, while the average claim was up 60%.

Of these claims, 37.4% were for late payment interest and/or compensation, up from 31.6% in 2008.

Lovetts also witnessed a 58% increase in the levels of debt being chased through letters before action (LBAs) with the average value of LBAs increasing by 20%, Q1 2009 vs Q1 2008.

LBAs are used to secure payment or to obtain a response from a customer ahead of legal proceedings.