How income maximisers can decrease problem debt

09 June 2022

‘Cost of living’ - the phrase that is dominating the airwaves.

Whilst the pandemic resulted in only a marginal increase of people in problem debt[1], we are now facing a different challenge altogether; the macroeconomic backdrop that has been brewing for a few months is hitting hard with no immediate let up, and the Bank of England forecasts inflation to peak at ~10%[2] in Q4 of 2022, following the predicted energy cap rise in October.

But what does that mean for collections? How can we ensure that those that can pay do pay? And how can we look after those with low incomes while making sure that debt owners get paid? There is a way.

An alternative to forbearance to help those most in need

If we take a step back and look at the end-to-end financial lives of our customers, we know that some will weather the storm, and some  may even be better off. That allows us to think about refining our collection approachto ensure that those who can make affordable payments do make affordable repayments.

But what about the low income or financially imperilled segments of the market? How do we ensure creditors continue to get paid when customers have either little to nothing in terms of disposable income, or (worse still) find themselves in a negative budget situation?

Forbearance is not the only solution. How can we get more money into people’s pockets to lift them out of the burden of debt in an affordable way? Thankfully, there are some excellent services that have been doing this for years already – the income maximisers.

What are income maximisers?

Income maximisers range in their services, but they all have the same core principle – to make sure consumers receive what they should from the government. We are not talking about insignificant amounts either: one service, EntitledTo, estimates that ~£15bn of benefits go unclaimed each year[3].

And there are plenty of success stories from other providers that mean families can enjoy a better quality of life due to the increased income and are less likely to fall into debt again in the future:

  1. Policy In Practice ran a pilot with central and local government[4] that showed people had been able to pay down and/or clear debt after using these services because they received the full amount that the government intended them to receive.
  2. IncomeMax worked with a water company over five years and found £3m for thousands of its customers[5] (and since it started in 2009, it has found over £20m of unclaimed income).
  3. The Turn2Us service, has a searchable database of charitable grants in addition to its benefit calculator, so if a customer is discussing breaking a repayment plan to replace their washing machine, for example, then a grant to replace the item could help the customer, the client and the charity.

All these services have a partner/client model that organisations can use to help customers get paid, which in turn gives them a better chance of being able to pay creditors; as is often the case in the collections industry – the ethical approach yields the best returns.

How can you help to provide fair outcomes for your customers?

If acting in your clients’ best interests and getting them paid aligns with acting in your customers’ best interests and getting them paid first, then that is a fair outcome for everyone.

Just believes that you deserve to get paid, but not at any cost. With that in mind, we have embedded income maximisation into our customer journey to make sure that people are in the best financial position possible to make an affordable repayment plan. Please get in touch if you’d like to discuss your current and emerging challenges.

Steve Coppard
Group Director of Debt Policy and Strategy
Just and Arum

September 2018 data in the NAO Tackling Problem Debt report; February 2022 data – MaPS website blog

[2] BoE Monetary Policy Report May 2022

[3] EntitledTo Annual Review

[4] Cabinet Office Reimagine Debt pilot with Policy In Practice, London Borough of Barking & Dagenham Council and Newcastle City Council

[5] LinkedIn post by Lee Healey, Founder, IncomeMax