an interesting policy report on the mechanisms by which individuals take action when their credit problems are starting to get out of control and the relevance of the behavioural economics literature to this area
http://www.dca.gov.uk/review_debt_research.pdf
"Individuals who are being pursued for repayment of debts often fail to engage with their creditors, or delay engagement until a late stage in the process; Lea et al. (1993), for instance, reported that as few as one third of debtors contact their creditor. Avoiding this contact can, however, lead to higher costs for the individual, such as those arising from court action, and can cause stress to the debtor. In response to this situation, Her Majesty’s Court Service (HMCS) is managing the Department for Constitutional Affairs (DCA) Debt Programme, a key element of which is Proportionate Dispute Resolution. One aim of this element is to develop procedures that will encourage debtors to engage with their creditors and develop alternative solutions to debt problems that might otherwise lead to court proceedings. This report considers the lessons that can be taken from behavioural economics and psychology to help achieve this aim."
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