Consumer CCJs rocket

By MICHAEL CLARKE
Updated:

 

THE number of lenders turning to the courts to help claw back debts from consumers is rising at the fastest rate since the last major recession in 1991.

During the first half of the year, the number of County Court Judgements (CCJs) against consumers increased by 14.8% to 290,643, the most rapid rise since the same period 14 years ago.

Lenders are going to the courts as more borrowers are defaulting on loans and credit agreements in greater numbers as debt problems start to bite.

The Registry Trust, the organisation that records CCJs, said 18,000 judgements a month came from a new DVLA policy of obtaining judgements against people failing to pay road tax.

Malcolm Hurlston, chairman of the Registry Trust, said: 'The rise in judgement numbers is clear proof of a deteriorating economy in the personal sector. Lenders have returned to the county courts to pursue people who have not repaid, reversing a trend.'

He added: 'This demonstrates the enduring value of the judgement route to the credit industry.'

Consumers with CCJs on their credit files struggle to secure credit cards and loans and often have to resort to the sub-prime lending market, specialist companies that target credit-impaired consumers.

However, building up CCJs could put your home in danger. Once you've fallen into arrears and failed to keep up payments, under a County Court Judgment lenders can apply to the court for a charging order, meaning the debt is put against your home. Normally this would be repaid when you sell, but lenders can ask the court for an order to sell.

• TOOLS: Check your credit rating in minutes

A spokeswoman for the Consumer Credit Counselling Service, a debt charity, said: 'If more judgments are to be avoided, we would encourage people to seek help from us as soon as they are starting to find it difficult to pay their bills.

'There are some signs that this may already be happening, with calls to our helplines being up by over 50% for the first six months of this year.'

Most watched Money videos