Page last updated at 16:56 GMT, Friday, 31 October 2008

What is it like being a debt collector?

By James Westhead
Education and social policy correspondent, BBC News

As he strides down the high street, smart black raincoat flapping, Scott must be the shopkeepers' vision of the Grim Reaper.

Scott the debt collector
The credit crunch means debt collectors like Scott are very busy

A visit from him is to be feared, bringing financial pain and possible devastation to small businesses, often already struggling.

That's because Scott is a debt collector - or, more correctly - a high court enforcement officer.

His job is to collect money people owe and, when they can't pay, to take away their property instead. His work is the sharp end of the credit crunch and, perhaps not surprisingly, business is booming.

Today, Scott is heading for a small fabric and wool store in Peckham, South London. In his hand, a High Court writ ordering the owner to pay about 4,000 that she owes a supplier.

He knows that for months she has ignored lawyers' letters, court orders and two previous visits by enforcement officers.

Firm but fair

Immaculately dressed, he is unfailingly polite but leaves no room for negotiation. "Please pay me now in full. If you don't, I shall have to begin removing the contents of your shop."

The owner tries to argue that she doesn't have the money, that perhaps she could pay by instalments and even that the contents of the shop belong to someone else.

We used to go to two or three bailiff clearances a week - now it's two or three a day
Steve Zealander, owner of Plaistow Auctions

But Scott has heard it all before. The woman is becoming angry and says she can borrow the money from her sister if only he will wait.

He patiently explains that it's too late for waiting and that he has no choice but to begin removing her property immediately, although he agrees that if the money turns up, he will return the wool.

Scott explains: "This happens all the time. People say they'll pay with a credit card or something but it never turns up. I can't afford to wait.

"If I come back next week, this business could have gone bust or another bailiff might have visited and there'll be nothing left for my client. So there's no option really - the stuff has to go."

Booming business

Scott's employers are an Essex-based debt collection agency - Sherforce - that asked to withhold his surname for his personal safety.

Chief executive Claire Sandbrook cautiously admits the debt business has never been better.

She says that there has not yet been an increase in the actual quantity of debts, but there is a new urgency - a growing number of customers want to recover money quickly, just in case their debtors become insolvent.

She makes no apologies for being robust with those who fail to pay their debts: "The problem for creditors is that if they don't collect their debt, then they themselves become at risk and their own cash flow is jeopardised."

Stripping assets

Meanwhile, the wool shop is being stripped of its contents. Two assistants load crate after crate of wool and fabrics from the woman's shop into a waiting lorry. Scott meticulously catalogues the contents.

If creditors don't collect their debt, then they themselves become at risk and their own cash flow is jeopardised
Claire Sandbrook, chief executive, Sherforce debt collection

Their ultimate destination will be an auction house where the wool and fabric will be sold off for a fraction of their value - as little as 10% of their retail price.

That means that debt collectors often need to remove goods with a retail value up to 10 times the size of the actual debt.

In an East London warehouse, piled to the ceiling with seized goods, bidding is already underway on the contents of half a dozen other shops which have been stripped, including an off-licence, a toy shop and a newsagent.

The auctioneer and owner of Plaistow Auctions, Steve Zealander, has been in the business for decades and thought he'd seen it all.

But he admits he's never been busier: "We used to go to two or three bailiff clearances a week - now it's two or three a day.

"The reason is the credit crunch - people are not paying their bills, not paying their rates, and the bailiffs are going in to get their goods.

Debt collectors' preferred currency is cash, but they will take cards

"Auctioneers are the best barometer of what's happening in the real economy.

We saw this coming two years ago and things are going to get a lot worse, especially after Christmas, when businesses are going to collapse like a pack of cards.

"We're a bit scared to be honest - where are we going to put all the stuff that gets seized?"

But while business may be booming for him, he insists he's not necessarily making much profit, as buyers are also feeling the pinch: "Lots that went for a tenner are now only fetching 5. We're still selling, but for how much longer?"

On the road again

Back on the road with Scott, his next stop is an Indian restaurant in Bromley, South London. The restaurant owes a supplier about 4,000. In the middle of the afternoon, it's closed, but that doesn't stop Scott.

Like all High Court officers, he's authorised to force entry to recover debts from commercial premises.

There used to be loyalty between businesses - long-standing clients like us would be given some leeway. But not any more... suppliers just want their money
Feruz Ali, restaurateur

Within 10 minutes, a locksmith arrives and carefully drills out the lock, allowing Scott into the building. Inside, he assesses the potential value of tables, chairs, kitchen equipment and a couple of flat-screen TVs.

It won't be enough to recover the debt at auction. But before he can begin removing the goods, the restaurant's staff start arriving and soon put the owner on the phone.

Second chance

He says he's on his way and has cash, so Scott decides to wait. Sure enough, an hour later, Feruz Ali arrives with an envelope bursting with cash.

The restaurant is saved, for now.

Mr Ali says he hadn't been fully aware of the debt as he had been away at a funeral in Bangladesh. But he admits his restaurant businesses have been severely affected by the credit crunch, with custom down 50%.

The result, he says, is that there's no more trust: "There used to be loyalty between businesses - long-standing clients like us would be given some leeway.

"But not any more... suppliers just want their money."

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