The Debt-IN Challenge
The bank tasked Debt-IN with a loan collection and rehabilitation mandate of a complex retail book with a high average arrear balance (R200k – R400k). A key objective was the curing or rehabilitation of accounts that were in arrears. With a book of this nature, a period of six months or more is usually allowed before turnaround results start to show, but the Debt-IN team was determined that this challenging project would gain traction earlier; that the improvement rate could not only be met, but bypass the deterioration rate before the expected 6-month turnaround period.
The Debt-IN Solution
Debt-IN focused on steady, incremental turnaround traction to ensure long-term solutions. The aim was not only to increase the curing or improvement statistics for the client but to slow down the deterioration rate of the defaulted loans held at the bank. Critical to this success was a review of the debtors’ overall financial position, and where necessary a re-structuring of the debtors’ existing debt arrangements. In July, the team was excited to present rewarding results to another satisfied client.
The Debt-IN Results
From February, the curing rate improved substantially as the project gained tractionFrom March to June, deterioration rates declined sharply from R28.4m to R11.2mClient could see the combined effect of the above would lead to long-term results—an overall decrease in other stages of the defaulted loansIn May, the improvement rate shot past the deterioration rate; just five months after commencement of the mandateDebt-IN delivered excess capital value, especially as the improvement rate continues to grow for this client.
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