ABSTRACT
Against the broad context of the credit and debt society outlined in Part 1 of this book, Part II is concerned with an examination of a small number of specific issues, namely the way borrowers develop, experience, and manage arrears in the early, pre-judicial stages. While there are now a number of studies of default, analysis and discussion are most frequently based on data drawn from the lenders or the courts. Only infrequently has the borrower been the source of information (and then it is borrowers at the judicial stage who are considered), and so currently very little is known about the way borrowers perceive and understand the emergence of default, the factors that structure their response and subsequent development of an arrears management strategy. Further, little has been written about the consequences for borrowers that stem from the ways in which creditors implement their arrears management policies, the form, content, and impact of the demands made, the degree of negotiation that occurs, and the nature of the relationship between the creditor and defaulter. Many of these issues are not amenable to scrutiny via institutional records; for example, routes into bad debt are complex, drawing upon and interweaving structural, income/expenditure, and personal factors. Even though it is easier to gain access to creditors than defaulters (which in part accounts for the current pattern of studies in the area), the complexity of borrowers' circumstances is unlikely to be compatible with the dear-cut administrative categories used by creditors. (For a fuller discussion of the creditor's view and recording categories, see, for example, Rock (1973) and Doling et al. (1988, chapter 7.))
The issues outlined are considered by examining a group of borrowers with mortgage arrears who, as discussed in chapter 1, can illuminate not only housing debt, but something of default in general. Mortgage default, as experienced by the building societies, usually occurs amongst those who form part of the market for credit based on affluence. Despite the recent growth in down-market, lower income lending and the move towards higher percentage loans, this picture is still largely the case. This credit is not concerned with the short-term crises often linked to the management
of poverty but, rather, granted on the assumption of a steady and adequate (possibly rising) income, and in a context in which most buyers still provide some equity in the property. Even in the case of credit granted under the terms of the 'Right to Buy' legislation where the loan conditions are more relaxed (allowing up to four adult incomes to be considered), there is still the principle of assessing that total income is adequate to meet the repayments. However, within this overall 'affluent' market it is the less affluent who comprise the majority in the pool of defaulters and increasingly it is argued that owner-occupation is no longer a homogeneous tenure, but one becoming polarised between a traditional affluent, 'successful' sector and a more marginal, low income/high commitment sector, where many are first-time buyers and in occupations particularly vulnerable to economic disruption. For these people the term 'affluent' may be increasingly inappropriate (Karn et al., 1985; Doling et al., 1986). However, although it is this second sector that is most vulnerable to arrears and whose members constitute by far the largest number of those in default, such that in general there is a relationship between marginality and default, too close a mapping of affluent and economically marginal groups on the one hand and payers and defaulters on the other could be premature. In addition to resulting from unemployment, default may occur as a result of relationship breakdown or over-commitment, events less immediately tied to specific levels of income, even though it remains possible that they are more easily resolved amongst higher income groups. In a similar manner, as will be discussed later, default may be relatively frequent amongst those self-employed who are 'intermittently affluent'.
