Over-leveraged Aussies signing up in record numbers for debt negotiation services
Fintech Credit Intelligence’s Australian subsidiary ChapterTwo (CHT) says its seen client acquisition growing as Australian’s who over leveraged themselves when rates were low are lining up for their services.
The company provides Informal Debt Solutions and Broking Services under its newly approved Australian Credit Licence.
And more and more clients each month are requiring the use of Credit Intelligence’s (ASX:CI1) – ChapterTwo’s services and app to make one monthly repayment to their creditors to assist with budgeting and cashflow.
ChapterTwo says homeowners in particular are feeling the impact of rising interest rates.
“As interest rates are rising we are seeing our clients disposable incomes are tightening which is having a flow on effect to their unsecured debt payments,” the company says.
“Our clients’ mortgage repayments are growing which is placing pressure on their unsecured debt repayments.
“This has meant we are seeing an increase in clients looking to refinance to consolidate their debts or requiring debt assistance.”
And it’s not just homeowners feeling the heat. With the increases in cost of living, Australians’ budgets are tightening and they are no longer able to manage all of their debt repayments.
“Most client engagement is due to the vast number of debts Australians have acquired over the last few years and the inability to manage all repayments,” Credit Intelligence said.
Not to mention that the Buy-Now-Pay-Later growth over the past 2 years – and the fact that most of these lenders do not credit check – has allowed consumers to take out multiple facilities with multiple lenders.
“Given the repayment of these debts is required in a short time it has placed pressure on regular credit card and personal loan repayments,” the company added.
“This traps consumers in a debt cycle they cannot repay.”
As rates continue to grow, unsecured debts become the first liability distressed consumers stop paying.
Plus, many small businesses have collapsed, and the owners have personally guaranteed a lot of debt which they are now personally liable for and require assistance from debt companies like ChapterTwo to negotiate payment arrangements to avoid Bankruptcy.
“The need for our services is growing given many Australians have over leveraged themselves whilst rates were low,” the company said.
Client acquisition is growing month on month as demand heats up for the company’s service where clients can make one monthly repayment to their creditors to assist with budgeting and cashflow.
Credit Intelligence says it’s seen a robust 67% increase in revenue (unaudited) in the 1st quarter of FY23 for CHT compared to the last correspondence period.
This article was developed in collaboration with Credit Intelligence Limited, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.