The number of County Court Judgments (CCJs) issued against borrowers who are struggling to pay their debts is on the increase according to the latest statistics from Registry Trust Limited (RTL) who maintains the Register of Judgments.

In the first half of 2014 the number of CCJs issued against individuals rose by around 40% compared to the same period in 2013. With 344,109 being issued in the first 6 months to June 14 and 245,424 in the first half of 2013 this is an increase of just under 100,000 over the period.

Applying to the Court for a CCJ is normally the first formal debt collection step that a lender will take if their standard reminder letters and telephone calls have not worked. The issue is that once issued the Judgment paves the way for the lender to take further action.

Are debt problems on the increase?

The latest insolvency figures issued in July do suggest that the number of people struggling to pay their debts is on the increase. Given this it would make sense that as more people have difficulties repaying what they owe the number lenders who turn to applying for a CCJ increases.

However there are also some other factors which have undoubtedly had an effect on the numbers.

The first is that following a change in the law in 2012 any lender who is successful in getting a CCJ can now automatically apply for a Charging Order against the debtor’s property. This has the affect of securing their debt and giving them a much higher chance that it will be repaid.

In addition it is becoming evident that lenders are increasingly selling on their bad debts to debt purchasing organisations. These organisations seem far more likely to apply for Judgments even where debts are relatively small.

Have you received a CCJ or are you at risk of getting one? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts

What is the affect of getting a CCJ?

Whatever the reason the fact that more applications are being and more CCJs are being issued is of significant concern for people struggling to repay debt. One of the main problems with receiving a Judgment is that it will have a negative impact on your credit rating.

When a Judgment is issued against you it is recorded on your credit file. The record must then remain for 6 years even if the debt is repaid in full in the mean time. This will have a significant detrimental effect on your credit rating for this length of time making it far more difficult to get new credit and a mortgage.

The other significant issue for homeowners is the possibility that the creditor will then automatically apply for a Charging Order against their property.

Once a debt is secured in this way the lender cannot force the sale of the property. However they then have an extremely high chance of their debt eventually being paid in full as it can no longer be written off in formal insolvency proceedings such as an Individual Voluntary Arrangement (IVA) or Bankruptcy.

What should you do if you receive a CCJ Admission Form?

You will know if one of your creditors is applying for a CCJ against you because you will receive an Admission Form. This is a formal looking document which is blue in colour and will have an official Claim number and Court stamp.

If this form is received it is very important to complete and return it correctly including your income and living expenses information. If you fail to do this then you run the risk that a Judgment will be issued ordering you to make monthly payments that you are unable to afford.

If you are unable to repay the debt you owe in a sensible period of time or it is just one of a number of debts you are struggling with then you should also consider starting a debt management solution.

Normally if a CCJ application has already been issued you should consider and Individual Voluntary Arrangement (IVA) as once in place this will overturn this action and prevent further similar action being taken against you in the future.

If you are a home owner the IVA will also protect your property from the future threat of Charging Orders.