The increase to the cost of living and the impact on debt recovery

From 1 April 2022, millions of people in the UK became affected by significant escalation in energy rises which is likely to increase energy bills for the average household by at least £690 per year. The energy cap has gone and further significant upsurges are expected in October 2022. This is in addition to council tax and water bills rising from 1 April 2022.
Food and clothing have also seen significant escalation in pricing and interest rate increases could negatively impact mortgages. Despite the marked increase to the cost of living, individuals’ salaries are failing to keep up with inflation.

More recently, the invasion by Russia into Ukraine will have a significant impact on food prices. The UN Food and Agriculture Organisation has warned that the war threatens the global supply of key staple crops.

The increase in the cost of living and the significant rise in inflation has the potential to have an adverse impact on debt recovery. However, taking proactive steps to tackle bad debt (as a creditor) and to resolve unpaid debt issues (as a debtor) can facilitate a swift resolution to solving problems without court intervention.

In this article, our Commercial Recoveries team take a look at the impact of mounting debts from both a debtor and creditor perspective.

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