loan-sense.co.uk

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.’