“Who helped me restructure my debts, who is my uncle.”
After the epidemic, the unemployment rate has risen, and many people have difficulty in capital turnover. How to alleviate the difficult cash flow and manage debt suddenly became a need.
In countries such as Europe and the United States, debt restructuring has long become a business model and an important tool for maintaining financial stability.
But in China, debt restructuring has grown a little bit deformed, and it has been threatened by a wave of anti-collection.
At present, on short video platforms such as Douyin, thousands of anti-collection accounts have been formed. They teach daily collection and financial institution skills, and therefore have more than 5 million fans. (For details, see: “》)
These anti-collection accounts are mostly for profit—they charge a service fee of at least 10% to the debtor.
Many industry insiders believe: “This is equivalent to the prototype of debt restructuring, but it is too brutal and too deformed.”
They estimate that debt restructuring is a 400 billion market. It should not be occupied by cluttered weeds, but should have strong vegetation with lush foliage …
01 Just Needed Market
“Who can help me alleviate the debt problem now, I will call him uncle.” Ping Jie left a message under an anti-collection account and asked for help.
After the epidemic, he lost his job and all three credit cards were overdue. “Even the lowest repayment amount cannot be paid.”
The money owed to the bank has serious consequences.
An intermediary engaged in anti-collection said that after overdue, some banks will charge a penalty of 5% and interest is 1.5%.
In addition, interest will be compounded on a monthly basis, so that the “annualized interest rate will reach 128%.”
That is to say, if you owe 100,000, you do n’t care about anything. After one year, you have to pay 228,000.
The liquidated damages have always been the profit of bank credit cardsDevice.
The high amount of liquidated damages is not the thing that worries Ping Jie the most. What he fears most is the disaster in prison.
According to the new credit card regulations in 2020, the penalty for overdue credit cards is 50,000 yuan.
On the one hand, the cash flow was cut off, and on the other, the financial institutions were under heavy pressure. Therefore, after seeing the anti-collection information on Douyin, Ping Jie rushed to the hospital.
Like Hepingjie, many people were caught in a debt crisis after the epidemic.
They have never encountered such a big crisis, and they have become unruly and chaotic, looking for help on the Internet.
“In the past, this market has always existed, but the demand is not urgent. Now, the epidemic has turned this market into a just-needed market.” Li Mobai, a risk control expert who once discovered Discover in the US
He calculated that China ’s consumer credit balance was 14.6 trillion last year. Even if it is very conservatively calculated at 3%, this is also a 400 billion market.
Li Mobai initially judged that debt restructuring will become a just-needed outlet, which may spawn a series of startups.
But what surprised him was that instead of seeing a mature business model, he saw that some people were doing profitable harvesting.
Loan intermediaries, financial practitioners, and even collectors have entered the industry in an attempt to nuggets.
They acquire customers through new tools such as short videos and live broadcasts, and then sell their “services”.
They teach arrears how to deal with collections, help them negotiate with financial institutions, how to pay less, or not, so they can charge commissions.
debt restructuring advertisement issued by an intermediary online
The commission they charge is not low, generally more than 10% of the debt amount.
That is to say, if they help you negotiate a debt of 100,000 yuan, the fee is 10,000.
“This is a very primitive and savage model. Players are not prepared to dig into this market, but just want to make a quick money. “Li Mobai said.
02 The Stone of Other Mountains
Although debt restructuring is still in a very primitive stage in China, in the European and American markets, debt restructuring already has mature experience and samples.
“In the United States, debt restructuring is a serious profession.” Li Mobai said that there are many agencies in the United States that specifically help people solve debt problems, called CCCA (Consumer Credit Conseling Agency, consumer credit consulting agency).
And their employees are called “debt restructuring consultants”, which is still a formal profession that needs to be verified before they can start their jobs.
CCCA is similar to a lubricant between arrears and financial institutions. They negotiate between them in order to find a solution acceptable to the latter two and resolve conflicts.
For example, if a debtor owes $ 100,000 in three financial institutions, he can call for consultation and finally confirm that CCCA will provide him with debt restructuring services.
“Once CCCA intervenes, financial institutions will no longer call the debtors for collection.” Li Mobai said that this is also a very humane place.
First, CCCA will investigate the real situation of the debtor and determine the amount he can repay each month.
Second, CCCA will go back to negotiate with these three financial institutions to determine a reasonable repayment plan.
Next, the arrears will send money to CCCA every month, and the latter will allocate the amount and return it to the financial institution.
In the earliest days, CCCA was still a for-profit organization, and it would collect the arrears dues and service fees. Later, CCCA gradually stopped charging the arrears, but instead collected money from financial institutions.
Why are financial institutions willing to pay?
“For financial institutions, these users may not be able to repay the debt, and the money owed may become permanent bad debts. If CCCA intervenes, even if the other party is still slow, at least there will be a repayment.” For financial institutions, this is a turning point.
Generally speaking, once the debtor repays for 6 consecutive months, the financial institution will give CCCA 20% to 30% of the refunded amount.
In the United States, CCCA is like an independent and impartial third party. It has an important position in the minds of financial institutions and debtors.
Allegedly, CCCA has helped millions of individuals who have experienced debt crises to overcome difficulties.
Especially after the financial crisis in 2008, the entire financial system suffered heavy losses. “CCCA and other institutions have helped the financial industry to slowly release risks and allow the social system to heal itself.”
Outside CCCA,The United States also has a for-profit debt negotiation agency. They are closer to intermediaries in China and will charge users a service fee of more than 10%.
And these for-profit organizations are not too good-looking.
For example, if a user can only pay back $ 2,000 per month, such an institution may ask the financial institution after receiving the money: whether it can accept a repayment of $ 1,500 per month.
The difference between them, $ 500, becomes their income.
There are many such agencies that will charge a percentage of the amount paid, such as 25%.
It is worth noting that the repayment of such institutions is often lagging. After users give them money, the money is not immediately returned to financial institutions, so the overdue of users will continue to increase.
“Financial institutions are resolutely rejected by these institutions, but users do not know that they are irregular, and will be attracted by their advertisements and take the initiative to find them.” Li Mobai said.
But these for-profit organizations can only survive in the cracks, because the CCCA system is relatively complete, forming a complete mechanism.
03 New Battlefield
In the United States, in addition to the existence of a mature institution such as CCCA, the debt restructuring market can do it, and there is another reason, that is, the digitalization of post-loan management.
Large-scale financial institutions in the United States generally stratify overdue customers and build models.
The modeled data has many dimensions, such as risk level, overdue days, loan balance, income, repayment history and other variables.
“In Discover, there are more than two hundred test groups of this type alone.” Li Mobai said.
With these models, you can determine which repayment method is best for financial institutions and customers.
“So, all debt restructuring plans are not conceived by patting their heads.” Li Mobai said.
This zero-sum game requires the support of data: more reductions, financial institutions suffer losses; less reductions, and limited help to customers.
Li Mobai made an attempt in China, but the result was unsuccessful:
He asked the collector to provide the user with multiple options, such as “repayment of principal and interest”, “repayment of principal and part of interest”, and “60-period repayment” in the order of best for financial institutions and second-to-lowest Principal, no interest “.
His idea is that the collector will first propose the first plan to the customer, if the user does not accept it, then the second, and so on.
Unexpectedly, in order to improve the recovery rate, the collector usually provides the last option directly to the user-“60 days to pay off the principal, no interest.”
This is the best solution for debtors,For financial institutions, it is the worst. Finally, financial institutions suffered losses.
Debt restructuring without data support is like a child ’s play.
Next, how will China’s debt restructuring market develop?
“In the short term, these brutal and elementary methods may still dominate the mainstream.” Li Mobai believes.
But at the same time, some people decided to work hard in this area.
A team from the bank collection department has begun to enter this market, and its model is similar to CCCA.
“We can’t stand by, not only from the perspective of the debtor, nor from the perspective of financial institutions, but should be completely neutral.” Chen Yi, the team’s founder, said.
But he also said that sticking to this original intention is not easy.
“Because the relationship between the collection agency and the debtor has been struggling, to alleviate this contradiction, it may require a lot of market education.” Chen Yi said.
On the other hand, there may be a lot of opportunities in the field of “data-based management of post-loan management”.
Li Mobai believes that the domestic financial institutions competed at one time mainly before and during the loan, and in these two fields, the means of data have been similar, and it is difficult to have an absolute advantage.
But post-loan management can instead become a new battlefield.
Consumer credit has gone through a four-year golden development period, and now it has reached a critical point in the outbreak of debt problems.
The “black swan” in the epidemic has accelerated the outbreak of the debt crisis.
For the Chinese financial market, this is the most severe stress test; for post-loan management, it provides a rare opportunity.
For this, Chen Yi is very confident: In this just-needed market, “a mature business model can appear within a maximum of one year.”
* The interviewee in the text is a pseudonym.