This week, it was reported that County Court Judgements (CCJs) have risen dramatically – which leaves many vulnerable people at risk of being chased for debts. This all comes as the UK Government prepares to lift several of the protections put in place on people struggling with debt, including a ban on repossessions.
A CCJ is a kind of court order issued against people who have fallen behind on a payment, such as on a car or with a utility bill. A single CCJ can seriously affect a person’s credit score, which can lead to problems obtaining other loans – including a mortgage – later in life. The judgement is wiped if paid in full within one month, or it remains on a person’s record for six years.
This rise in CCJs is worrying, in part because it’s happening much earlier than was forecast. Based on previous data, CCJs were expected to rise in April and peak in September – and it’s unclear whether the current surge is an early peak, or if the 82,000 CCJs issued recently are the foothills of a significant rise later in the year.
CCJs don’t include priority debts, like rent and council tax. But they destroy a family’s ability to get credit or a decent tenancy. They’re also the first step in instructing a bailiff, and allow many debts to be sold onto debt management companies – who are very likely to collect and instruct bailiffs. Because the majority of CCJs only involve approving paperwork submitted by lenders, thousands can be processed in just one day of the courts opening.
The current methods in place to deal with problem debt simply do not respond to the unprecedented rise in debt brought on by Covid-19. Despite the delay in evictions and bailiff action and the incoming Breathing Space scheme, families weighed down by debt need a more comprehensive solution. Write-off for debts incurred as a result of Covid-19 needs to be part of our response.
More and more experts and organisations are calling for something to be done, and for more protections to be put in place for vulnerable people. Mick McAteer, the chair of the Registry Trust, has said: “Government, regulators, the financial services industry, creditors, and civil society organisations will have their work cut out to support vulnerable households and help them rebuild their finances. There is no time to lose.”