By TAMLYN STEWART

Business Correspondent

THE number of debts handed over to collection agencies for recovery has swelled since the National Credit Act (NCA) came into effect in June last year.

The Association of Debt Recovery Agencies (Adra) said the fact the flow of easy credit had dried up is partly to blame for the increase.

“Before the NCA there was more credit, so people could pay off their credit with credit,” said Thinus Nortje of Adra. Now consumers have more debts, and less money to pay them with. This is prompting some creditors to move faster in prosecuting defaulting clients. “With some of the smaller clients they want the debt handed over sooner, so they can get judgment sooner and get the debt excluded from debt review,” said Marius Jonker, vice-president of Adra. For one particular debt recovery agent, the number of debts handed over has risen from just over 80000 in 2004, to over 400000 in 2007.

But the number of cases where collection is not possible is also growing. For one agent, the number of non- collections was nearly 180000 in 2007, compared to just over 32500 in 2004.

And it’s not just the defaulters who are feeling the pinch: “Companies budget for bad debt, and that cost is passed on to customers who can pay their debts,” said Jonker.