ABSTRACT
Credit provides the framework for default. Developments and change in the credit system and amongst credit institutions have important implications for the emerging pattern of default and for its management. Thus, although the heart of this book is a study of default and defaulters' experiences, the starting point must be with the credit system as a whole. On the one hand, the discussion in this chapter is designed for those with little knowledge of the credit system; to convey a sense of the growth, current scale, and organisation of credit. This chapter is not offered as a full or systematic analysis of the credit system. That task still has to be undertaken. On the other hand, beyond the contextual outcome, credit is examined because the relationship between the credit system and default may be very direct. For example, there may be a close relationship between increasing competition amongst creditors and a relaxation in entry requirements, or the use of more seductive advertising and the emergence of default, because these pressures have drawn in and encouraged as borrowers individuals whose income is unstable or whose budgets are already stretched. Such borrowers are then particularly vulnerable to default from overcommitment, as well as from any reduction in their income or any involuntary expenditure increases. Alternatively, the changing motivations for offering credit, away from credit as a means to increase the sale of goods towards credit itself being the profitable component, may have implications for the form of recovery process adopted vis-a-vis borrowers. In most instances these links, between the credit system as a whole and the borrower, are mediated by particular creditors whose organisational practices and values may be a further component in accounting for arrears. Thus, while the nature of the credit industry is not the only influence upon the extent and experience of default (see for example chapters 5 and 6), it is one obvious starting place for any discussion of default.
