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The amount of consumers with CCJs registered against them for consumer debts soared in the last year in yet another concerning indication of our over-indebtedness.

In total, 843,853 people had CCJs registered against them, up by a third compared to the previous year and the second consecutive year that the figure has grown.

According to the Registry Trust, the organisation that tracks the figures on behalf of the Lord Chancellor’s office, lenders are taking borrowers to court much earlier than before to ensure they have a claim on the borrower’s property.

CCJs are the first step in a legal process that can end with bailiffs at your door, demanding goods to the value of the debt. It is also the first step for a lender to obtain a charging order, which converts any unsecured debt into a secured one, enabling it to make a claim against the value of the borrower’s property.

CCJs are of course best avoided completely if at all possible, and for homeowners who have a number of debts which are proving difficult to manage and risk acquiring CCJs 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 the equity in their property 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.

A County Court Judgment stays on a person’s credit file for six years unless they pay the balance within a month of its issue. Even if the debt is paid within the six years, the CCJ will remain on file, but will be marked as ’satisfied’.

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

The lenders have seen bad debt levels explode in recent years as an increasing number of debtors utilise the less stringent bankruptcy laws and Individual Voluntary Arrangements. The latest set of financial figures from the banks show that Royal Bank of Scotland (owners of NatWest), HSBC, Barclays and Lloyds TSB collectively wrote off £11.6bn in bad debts from customers last year.

Malcolm Hurlston, Registry Trust chairman 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.’

Mr Hurlston 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.’

Consumer Minister Ian McCartney has urged borrowers to take advantage of free debt advice services before resorting to dealing with loan sharks.

The Minister, who will open a new London office for the Money Advice Trust (MAT), which runs National Debtline, said many people did not realise that free, impartial support was at hand to help them avoid debt problems.

“My advice to people struggling with debt is to pick up the phone - there are people who can help you find a solution and avoid the sharks.”

Mr McCartney, who recently visited Illegal Money Lending Teams cracking down on loan sharks in Birmingham and Glasgow, said:

“Loan sharks are lowlifes whose primary purpose is to rip you off. Many of them will resort to intimidation and violence to take money off the most vulnerable in our communities who know of no other borrowing options.

“Often it feels like there is no alternative than to turn to loan sharks but many people don’t realise that debt advice and information is available for free. National Debtline is there to help.”

National Debtline’s advice includes getting in touch with lenders straight away to explain your difficulties, and not to give up trying to reach an agreement on repayment terms even if creditors are difficult.

The Department of Trade and Industry supports the many aspects of MAT’s activities; in particular, by providing £1million annually to National Debtline.

The Government is also providing £ 47.5 million in a two-year programme to fund face-to-face debt advice, helping tackle debt for tens of thousands of people.

This funding will pay for over 500 new debt advisers to help people get their debts under control, and will fulfil the Government’s commitment to achieve a step change in the availability of debt advice.

As part of the Face-to-Face Debt Advice project, financed by the Financial Inclusion Fund, MAT is providing training for the majority of the advisers due to be recruited over the next two years.

Consumers can call National Debtline, on 0808 808 4000.

For debt encumbered consumers who feel that turning to loansharks is their only option in obtaining the funds they need to alleviate their financial situation, there are very often legitmate lenders who, whilst charging higher rates than those offered by high street lenders to ‘prime’ borrowers. Sadly, ’sub-prime’ borrowers often believe that the only kind of lender available to them is a loanshark and don’t look for a legitmate alternative as a result. The truth is that there are niche lenders, funded by some of the biggest financial institutions in the world, whose business plan is built around high risk lending to sub-prime consumers whose circumstances may be as adverse as having dozens of CCJs, 12 month or more of mortgage arrears, or even in an IVA or bankruptcy! Such sub-prime loans do of course carry higher APRs, sometimes in excess of 20%, but nowhere near the levels charged by the loansharks, which can sometimes be over 1,000%.

Secured loans specialist The Loan Helper prides itself on delivering realistic and affordable solutions for homeowners unfortunate enough to find themselves in such dire financial circumstances. With a intimate knowledge of the lending criteria of the 16 lenders on it’s panel, The Loan Helper’s expert staff can usually help beleaguered borrowers to turn their finances around with an appropriate and affordable lending solution. You can contact The Loan Helper on 0845 003 0066 or by sending an enquiry via their website at www.theloanhelper.co.uk.

The FSA (Financial Services Authority) has fined credit card and loans provider, Capital One Bank (Europe) Plc (Capital One) £175,000 for failing to have adequate systems and controls for selling Payment Protection Insurance (PPI) and for failing to treat its customers fairly.

PPI is applied to a number of credit products including mortgages, loans, credit and store cards, and protects a borrower’s ability to pay the loan in case of accident, sickness or unemployment. Around 6.5 to 7.5 million policies are taken out each year

The regulator says that from January 2005 to April 2006, Capital One failed to ensure that 50,000 customers received important information about the policy - including all exclusions - although they did receive a policy summary. Affected customers were unable to check what they were covered for or if the policy was right for them.

While Capital One’s main business is providing credit cards, loans, and savings accounts from its operations centre in Nottingham, it also sells PPI on a non-advised basis to its credit card and loan customers over the telephone, internet or during the card application process. The FSA’s investigation focussed purely on credit card PPI sales. During 2005 Capital One sold approximately 335,000 UK credit card PPI policies.

The watchdog concedes that Capital One has been proactive in carrying out a full remedial programme addressing the systems and controls issues. Indeed, one part of the remedial programme ensured that those customers who did not receive the policy document had the opportunity to be compensated. The cost of this part of the programme, including potential premium refunds and settled claims, is estimated at around £3 million, of which £1.1 million related to customers after general insurance regulation started in January 2005.

This fine follows two phases of FSA work looking into PPI and the way it is sold. A third phase is underway and by the end of June 2007, the FSA will have visited over 200 PPI firms in two years.

Speculation has increased that best-buy loan rates could hit double figures before the end of the year if a crackdown on payment protection insurance (PPI) goes ahead as planned.

Currently the best rates for unsecured personal loans start at just under 6%, but rates have been rising in recent weeks following the Bank of England’s three bank rate rises since August (see our related story here).

Financial data specialists Moneyfacts warned that a clampdown on lenders selling PPI with their loans products could see rates rise to at least 10%.

Margins on personal loans are notoriously low and lenders struggle to make a profit on the main product. Instead, they make their money on the lucrative insurance policies they sell along with the loans.

Moneyfacts personal finance analyst Michelle Slade said: “With the Office of Fair Trading due to review PPI later this year, if lenders are forced to lower the cost of their PPI cover and revert to a ‘pay as you go’ type policy rather than a single premium, we could potentially see best buy loan interest rates reaching double figures before the end of 2007.”

Many of the best loan deals have disappeared since the beginning of the year. Northern Rock, for example, has increased its rate from 5.8% to 6.5%.

Slade added: “Our research shows that on a loan of £5,000 over three years, only four providers now offer rates below 6%, with more than 40% of the market charging in excess of 8%, and 16% charge over 10%.

With a difference of 14.8% APR between the most and least competitive rates, shopping around for the best deal is an absolute must.”

It makes sense to act now if you are thinking about taking out a loan and grab a good deal whilst lenders are still offering low rate loans. A great starting point is to get The Loan Helper to search the market for you to find the best deal available. With a panel of 16 top UK lenders on hand and hundreds of different loan deals available between them, The Loan Helper is ideally placed to secure the best possible rate for your loan now before lenders are forced to increase them. The Loan Helper offers a free personalised secured loan quotation service with no obligation, so request yours now here.