IVA & Debt Consolidation Advice

Several consumers groups are concerned that creditors are becoming too quick to take court action rather than attempting to negotiate with debtors. This is in light of new figures that show county court judgments (CCJs) for non-payment have risen to a level that is approaching a 10-year high.

During the first three months of 2007, 247,187 CCJs because of consumer debts were issued. The last time the totals were this high was during the summer of 1997. Debt experts believe this increase is a combination of householders being under greater financial pressure and creditors being more willing to use the courts instead of negotiating with debtors in order to reclaim what debtors owe them.

A total of 296,841 CCJs were issued during the first quarter of this year. That figure includes those served on businesses and is a 9.1% increase over last year according to figures that were issued by the Registry Trust.

Peter Tutton, national debt policy officer for Citizens Advice is critical of how willing creditors are to utilize the court system. Their concern is that creditors failing to even attempt to negotiate with debtors, choosing instead to use court action. He also expressed concern that if new legislation passes making charging orders easier to obtain, the trend will continue in the future. Citizens Advice Bureau handled close to 1,500,000 debt problems over the last year.

Mr. Tutton is also concerned about proposed changes that would make it easier for bailiffs to enter people's home forcibly because of their debts. Because court action adds to the costs and financial hardship that people with a great number of debts already face, he feels that creditors should be more willing to work with debtors by negotiating according to industry standards before taking court action.

CCJs are issued when either individuals or companies fail to repay their debts. According to the Registry Trust, approximately 70 per cent of judgments are related to debts with the remaining 30 per cent being issued by the Driver and Vehicle Licensing Agency, water companies, and HM Revenue and Customs.

A debtor who fails to comply with the repayment terms of a judgment will be placed on the CCJ register for six years. This will make it more difficult for debtors to borrow money or obtain a mortgage.

The results of recent research showed that fifty per cent of Britons admitted they made serious financial errors and lack financial control over their spending. Research from CreditExpert.co.uk shows that more that 80 per cent of people in the UK overspend on a regular basis and millions have at least considered measures such as bankruptcy.