THE scale and pace of the financial challenges facing many UK households has been revealed this week in new insolvency research.
It shows that a record number of county court judgments (CCJs) were issued last year against individuals who fell into debt – double the level of eight years ago.
And there’s been no escape for the Yorkshire and North East region. We blogged in November how as insolvency map of England and Wales highlighted towns and cities across Yorkshire and the North East among the hotspots for financial pressures.
The average value of debts chased through CCJ filings rose 5% last year to £1,506 while the median increased 14% from £592 to £672.
Insolvency analysts say that the official figures released by the Registry Trust – which collects information on behalf of the Ministry of Justice – are further evidence of the “severe financial strain” on UK households.
A CCJ is a type of court order in England, Wales and Northern Ireland issued against individuals if they fail to repay money owed, often because they have fallen behind with utilities and mobile phone bills, gas, and car payments.
Once an individual has a CCJ on his or her credit record, it can lead to problems obtaining a mortgage, credit card or other personal loans in the future.
In an exclusive report in The Guardian, the data show that the number of CCJs against individuals in England and Wales who failed to repay their debts climbed by 3% – or 30,138 – to a new peak of 1.15m in 2019.
The total over twice as many than 2012, which was the last time that the figure fell. Insolvency experts have suggested the number of CCJs is likely to rise again in 2020.
Chair of the Registry Trust, Mick McAteer, said the new debt research showed that an increasing number of vulnerable households were battling to overcome severe financial strain and insolvency.
What is seen as a more worrying trend by insolvency experts is that the increase comes despite low interest rates. These have reduced the cost of borrowing for most consumers.
“Low interest rates have cushioned the impact of debt levels on the typical household, but it conceals the fact that large numbers of more financially vulnerable consumers are facing real financial strain for a number of reasons,” Mr McAteer said.
Real average earnings, which are still below pre-crisis levels when adjusted for inflation, are partly to blame, The Guardian reported.
Mr McAteer added: “Austerity measures are still impacting on many households. They have not worked their way through the system and there is more to come.”
A CCJ is usually removed from the register if the debt is paid in full within one calendar month of the judgement date. Otherwise it remains there for six years.
Any company can apply for a CCJ against an individual if that person fails to repay money owed. But Mr McAteer says organisations such as local authorities, utilities and debt collectors seem more willing to seek CCJs over smaller debts.
Local authorities have been widely condemned for pursuing households over failure to pay council tax, although they use something called a liability order, not a CCJ.
“The concern about local authorities is that because they are more aggressively enforcing debts, it is having a knock-on effect on households – ie it is making it harder to pay other debts which means they end up receiving a CCJ,” said McAteer.
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