County court judgements – also referred to as CCJs – are on the rise. With the state of the global economy, it’s no surprise. What is surprising, however, is that the average value of these judgements has almost halved.
The in-house credit expert at Portify revealed that judgements over £500 are decreasing, while those under £500 are now on the rise. We explore some of the reasons for this turnaround, and also take a look at ways to remedy the situation.
No service, no pay?
Some of the services that consumers are getting written up for include gym contracts. Some gyms offer a respite on payments. Others offer an extension of the membership term instead.
There could also be an option for a permanent decrease in gym membership costs. Consumers are encouraged to contact their gyms to find out what the policy is.
Early childhood care is another example where the service cannot be rendered, but there is an expectation that the fee is honoured.
Guidance from the government suggests that these institutions don’t expect full payment or high payments. Instead, if any payments are requested during this period, it’s purely to keep the business operational. Parents who decide to continue with the contract are then obligated to honour the revised fees.
The rise of the debt collectors
The debt collection industry has seen a steady growth of 1.8% between 2015 and 2020. This growth, coupled with greater awareness of the process and cost of lodging a county court judgement could play a significant role in the increase of CCJs.
For a claim of more than £300 and up to £500, the cost of a court-issued claim is £50. If filed through Secure Data Transfer (SDT) or Money Claim OnLine (MCOL), the fee is £35. For many, the fee is worth the trouble of getting their money.
The in-house credit expert at Portify explains, “Requesting a CCJ involves making a court claim, paying a fee and securing a lawyer for the court hearing. This is why in the past businesses only went through the process of taking out CCJs for high amounts. Since the end of the last financial crisis in 2010, the collections industry has boomed, either through consolidation of big players or through PPI processors moving into the space. This means that due to economies of scale at the processing stage, the cost of getting a CCJ became competitive and cheaper for businesses via these third parties. It has also meant that companies were able to introduce CCJs as a debt recovery tool on lower amounts or as a new strategy altogether.”
The small county court judgements hurt too
Consumers may want to negotiate payment terms with their creditors in order to avoid a judgement. Considering that agreements under £300 can make their way to a county court judgement should be motivation enough to honour the agreement.
It’s important to note that a CCJ can remain on your record for up to six years, which can impact your ability apply for credit. While there are methods to remedy your credit record, this is an unnecessary process that can be costly too.