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The amount of people with County Court Judgments registered against them for debts soared in the last year in yet another alarming sign of our over-indebtedness. A total of, 843,853 people had County Court Judgments registered against them, an increase of a third compared to the previous year and the second year in a row that the figure has risen. According to the Registry Trust, the organisation that tracks the figures on behalf of the Lord Chancellor's office, lenders are bringing cases to court at an earlier stage of the process of debt recovery to ensure they have a claim on the debtors property. County Court Judgments are the first stage in a legal process that can result in bailiffs at your door, demanding goods to the value of the debt. It is also the first step for a lender to apply for a charging order, which converts any unsecured debt into a secured one, enabling it to make a recoup what is owed from the value of the borrower's property. County Court Judgments are of course best avoided completely whenever possible, and for homeowners with a number of debts which are proving difficult to stay on top of and are in danger of acquiring County Court Judgments as a result, an oft used and valuable 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 the balance within one month of being issued. Even if the debt is paid within the six years, the CCJ will remain on file, but will be marked as 'satisfied'. Even for borrowers 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 borrowers with adverse credit, and who will lend to borrowers with not only County Court Judgments, but also mortgage arrears and even to borrowers in an IVA or bankruptcy. The lenders have had bad debt levels explode in the last few years as an increasing number of debtors avail themselves of less stringent bankruptcy laws and Individual Voluntary Arrangements. The latest set of financial figures from the banks show that Lloyds TSB, HSBC, Barclays and Royal Bank of Scotland (owners of NatWest) 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 further added: ‘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 web developer for The Money Helper and renowned for his experience in a number of subjects in the UK financial services market. Darren currently writes for the online portal Loan-Sense.
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