Can't pay or won't pay? A review of creditor and debtor approaches to the non-payment of billsAuthors: Nicola Dominy, Professor Elaine Kempson
Funded by: Lord Chancellor's Department
Published by: Department for Constitutional Affairs
Publication date: March 2003
This research was commissioned as a result of the Report of the First Phase of the Enforcement Review, which identified that,
"... the system is not good at identifying which debtors have the ability to pay and which do not, so debtors may find themselves being pursued relentlessly for a debt that they have no means of paying. Equally, debtors who know the system's weaknesses are able to exploit them to avoid payment".
It was felt that the inability within the civil justice system to distinguish between debtors who won't pay and those who can't pay could potentially diminish the ability of the Review to achieve its stated aims, which were to make enforcement: more straightforward and understandable; capable of delivering higher rates of recovery; fair to both debtors and creditors, and particularly sensitive to those debtors who do not have the resources to pay; and capable of delivering results more quickly.
It was apparent from existing research that there is not a clear-cut distinction between can't and won't pay debtors and that more research was needed to explore this issue. This research project therefore aimed to clarify that picture within the context of debtors appearing in the civil courts, by addressing the following research questions:
- Why don't debtors pay?
- What features, if any, indicate a 'can't pay' debtor?
- How effective are different bodies responsible for enforcement at identifying and responding to 'can't pay/won't pay' distinctions amongst debtors?
In order to address these questions, the research had the following objectives:
- To identify and analyse the demographic characteristics of debtors who do and do not pay;
- To identify why debtors are willing or unwilling to pay, and which features of the debtor, the debt and the enforcement process influence such decisions;
- To investigate the enforcement practices of creditors, identifying why certain enforcement procedures are chosen and what mechanisms, if any, are in place to identify types of debtors and likelihood of recovery;
- To identify and analyse the extent and features of those who do not pay because, although they have the resources, they cannot accept the fact of their indebtedness; and identifying what factors, if any, would lead them to pay.
The information was gathered using qualitative research techniques. Fieldwork took place from the end of May to the beginning of October 2002, and involved:
- Re-analysis of 49 qualitative interview scripts from past research projects with debtors;
- Fifteen semi-structured interviews with debtors;
- Ten depth interviews with representatives from trade associations and regulators and the analysis of guidance for debt recovery;
- Twenty depth interviews with staff in the debt recovery sections of ten companies; and
- Two depth interviews with money advisers.
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