Business / Markets

As bad loans increase, so do private debt-collection companies

By WU YIYAO/JIANG XUEQING (China Daily) Updated: 2016-02-29 07:32

"Debt-collectors generally don't adopt violent means. An odd extreme case could involve getting physical with truant debtors, but that's about it. For debt-collection agencies, profits are not so high as to compel them into adopting illegal methods," Xiao said.

But unlike banks, other lenders like peer-to-peer lending platforms, small loan companies and guarantee companies engaged in private lending are said to be not averse to dropping the kid-glove treatment and instead using threats to make errant debtors repay.

Stressed out, many debtors would heed that message and payup, if they could, Xiao said. Ye Mingbo, 24, a shop assistant, said he received phone calls from debt-collection agencies in May 2015, when he could not repay some 8,000 yuan.

Ye had used his credit card to buy a laptop and camera lenses on installment basis. He could not repay in time as he was jobless for three months after he made the purchases.

After six months, Ye started receiving text messages from the bank, urging him to repay. Phone calls followed from the bank's in-house credit card services department. Then phone calls from a debt-collection agency started. On the fourth day, the agency called Ye, taught him how to analyze his financial situation and repay.

Despite outsourcing debt-collection to external agencies, banks have their own teams to deal with bad loans and seek help from lawyers, courts and the police.

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