County Court Judgments Rocket

By: Darren Ferneyhough

The number of people with County Court Judgments registered against them for debt rocketed last year in yet another worrying indication of our over-indebtedness.

An amazing, 843,853 people had County Court Judgments registered against them, an increase of one third compared to the previous year and the second year in a row that the figure has increased.

The Registry Trust, the organisation that tracks the figures on behalf of the Lord Chancellor's office claims that lenders are taking borrowers to court at an earlier stage of the process of debt recovery to ensure they have a claim on the debtors property.

A County Court Judgment is the first step in a legal process that can lead to bailiffs at your door, taking possession of goods to the value of the debt. It is also the first step for a lender to take out a charging order, which converts an unsecured debt into a secured one, enabling it to make a recover it’s debt from the value of the debtor’s property.

County Court Judgments are of course best avoided completely whenever possible, and for homeowners who have a number of debts which are proving difficult to manage and are in danger of acquiring County Court Judgments as a result, an oft used and viable tool is to consolidate a number of smaller, unsecured loans by taking out a debt consolidation loan using their home equity to secure a lower interest rate, which can serve to lower the monthly cost of repaying their debts, especially when combined with a longer repayment period.

County Court Judgments stays on a person's credit record for six years unless they pay it off in full within one month of it being issued. The CCJ will remain on file, even if the debt is paid within the six years, but will be marked as 'satisfied'.

Even for homeowners who already have County Court Judgments, there are still solutions available to get their finances back on track. There are a number of lenders who specialise in providing debt consolidation loans to homeowners with adverse credit, and who will lend to homeowners with not only County Court Judgments, but also mortgage arrears and even to homeowners in an IVA or bankruptcy.

The lenders have seen bad debt levels soar in the last few years as more consumers utilise the less stringent bankruptcy laws and Individual Voluntary Arrangements. The latest set of financial figures from the banks show that Barclays, Royal Bank of Scotland (owners of NatWest), HSBC and Lloyds TSB wrote off a collective £11.6bn in customer bad debts last year.

Registry Trust chairman Malcolm Hurlston said: ‘Judgments are an important item in creditors' armoury, particularly for dealing with people who are 'won't pays' rather than 'can't pays' and the sharp rise indicates that it is creditor behaviour that is changing.’

He continued: ‘Creditors are seeking judgments as the necessary first step to obtaining charging orders against debtors' properties, thus securing their share in any equity. It is a further warning to homeowners who may have borrowed too heavily on top of rising interest rates and escalating house prices.’

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Darren Ferneyhough is head of IT at The Money Helper and renowned for his experience in a number of areas in the UK financial services market. Darren currently writes for the online portal Loan-Sense.

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