Record number of CCJs issued in 2019
Figures from The Registry Trust which manages court records on behalf of the Ministry of Justice, revealed that CCJs climbed to a record 1.15 million in 2019 with a significant number issued to younger people.
Last year, around 160,000 people in their 20s were handed CCJs in England and Wales, up 30% from the year before.
Speaking on BBC Radio 4’s Money Box programme, Mick McAteer, chairman of The Registry Trust, said this is a continuation of a long-term rise in the trend which sees young people owe just a few hundred pounds.
He said there are two main reasons fuelling the rise in CCJs for younger people. “We have record employment and low interest rates but a lot of people are suffering financial stress.
“There’s also a rise in zero-hours contracts. The fall in the average value shows more and more creditors are using the courts to recover smaller debts.”
McAteer said the fallout from payday loans are still working their way through the system and mobile phone contracts and subscription services are also thought to be behind the rise.
Data from the final three months of 2019 show that CCJs issued were 111% higher than the same quarter in 2012 when they reached a post-crisis low.
What are CCJs, why are they a problem and what can you do?
CCJs are a legal mechanism – a court order which allows companies in England, Wales and Northern Ireland to recover debt. In Scotland they’re known as decrees but also remain on credit files for six years.
They can affect a mortgage and credit application, chances of renting in the private sector and more employers are also undertaking credit checks. Banks and law firms are required to carry out credit checks on prospective employees.
McAteer said people may have a CCJ and not be aware of it which is an indication that people are suffering financially. This is particularly acute for younger people as they tend to move house more often, making it harder to keep track of where a CCJ is sent.
He explains that if someone pays off a debt within a month of getting a CCJ, it’s cancelled and comes off a credit record.
If people pay off the debt a month after a CCJ is issued, a ‘satisfied’ marker is applied to a credit record. It will stay there for six years but as the debt has been paid off, lenders treat this information more favourably.
Recipients do have the option of challenging a debt, but as this goes to court it will cost money.