CCJs and Your Credit Record

A CCJ, or County Court Judgement is an order issued by a county court, which tells you how much you should pay and you should pay money owed to a creditor.

But how does a CCJ affect your credit record?

There is a nationally held register of all CCJs that is known as the Register of Judgements, Orders and Fines. This records many CCJs issued and they remain there for six years.  In order for a CCJ to appear on there, however, it must have been issued in default where no defence was entered at all (that is to say that the debtor failed to submit Admission Forms), defended and settled with payment being made in installments, or enforcement action must be being taken.

If you pay up in full within a month of receiving a CCJ, you will not be held on the register. If you pay in full beyond this time, your CCJ remains for six years but is noted on the register as having been ‘satisfied.’

If your CCJ appears on the register, the information that will be held about you is your name and address, date of the CCJ, amount it relates to, whether or not the CCJ has been satisfied and also the case and court number.

If you have a CCJ appearing on the register this will have a detrimental effect on your credit score.

Unfortunately, a CCJ rings alarm bells with many creditors and can make it particularly difficult to get credit. Even in cases where an individual with CCJs is able to obtain credit, the interest is likely to be much higher than that offered to those without such judgements.

Posted on in Debt.

What is a CCJ?

CCJ stands for County Court Judgement. But exactly what is a CCJ?

It is essentially a judgement issued by a county court, when a debtor fails to pay money they owe to a creditor. If you have failed to pay what you owe to a creditor, the creditor applies to the county court for them to issue the CCJ. The court then has the responsibility of determining whether or not there is a debt owed and, if so, how it is to be repaid.

When someone takes action against you with the county court, the court will issue you with a Claim Form. This is to let you know what the court believes you owe the creditor. You’ll also be sent an Admission Form.  This is basically your opportunity to explain your side of things – ie whether you have paid, whether or not you accept that there is a debt and any mitigating circumstances you feel there may be. There’s no point burying your head in the sand over this because even if you don’t send the form back, the CCJ may still be issued in what is known as a ‘default judgement’.

Essentially, you have 5 options when issued with the Admission Form. You can either:

  • Pay up – simply pay the amount in full.
  • Request payment in installments.
  • Dispute the amount you owe.
  • Dispute whether you owe anything at all!
  • Claim against the creditor – ie claim that they owe you money.

If there is a dispute, you may have to attent a court hearing. Otherwise, you will not need to attend at all and repayment will be considered in your absence.

Following consideration of evidence from the Admission Form and from the creditor, the court issues a CCJ, which will state the amount you must pay and how you must pay it.

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Before You Borrow

Consumer driven Britain means more of us than ever are now turning to credit. We borrow money for all sorts of reasons, in the form of mortgages, credit cards, store cards and loans. But before you sign on the dotted line, there are a number of things you really should be absolutely sure to check. Here’s a ‘before you borrow,’ checklist:

  1. Is your loan secured or unsecured? This is crticial. Essentially, a secured loan would be one that could be secured against your home whereas an unsecured loan has no such “security,” behind it. If you go into arrears on repayments on a secured loan, you risk losing your home.
  2. Have you read the contract? And I’m not talking about skimming over it. If you are in the bank and the cashier’s tapping her pen impatiently on the table, it can be a little off putting, yes. But don’t feel pressurised to hurry up over signing the contract. Take it away from the bank, read it properly, reread it and get a second opinion on anything you’re not sure about. Don’t sign something you have not fully read and understood.
  3. Will you be charged to repay the debt early? If you were lucky enough to come into some money a year in to your three year loan contact, would you be able to pay it off without incurring any charges? Believe it or not, some lenders do charge for early repayment. It’s worth avoiding those at all costs. Double check!
  4. Is the interest rate static? Some forms of credit have an interest rate that can change! While a reduction in your interest rate would be a welcome bonus, there’s also the risk that the interest rate could rise suddenly, leaving you with a more expensive repayment than you initially anticipated. If you are happy that you can afford the interest rate as it is at the time of signing, make sure you are on an agreement where it cannot increase. This is one way in which thousands of consumers are caught out every year in the UK.
  5. What are the consequences of missing a payment? Obviously, nobody plans to miss payments (I hope!) but because life is unpredictable, you should know exactly what would happen if you were to miss one. It’s critical that you’re full aware of any penalty charges that might apply in the event that you do miss a payment. If the charges are excessive, don’t sign. Excesive penalty charges can result in a slippery slope between one missed payment and some serious debt problems.
  6. Is this the best deal available? Check the competition. Their offering on the same credit deal might be better!
  7. How much will you pay back? One of the most important questions you can ask is how much you will pay back in total. It is easy to be blinded by interest rates and monthly repayment figures and to miss the total amount. If you borrow £3000, for example, how much is the total repayment going to be? If a lender tells you that your monthly repayment will be £100 a month for 5 years and then throws a load of numbers and terms at you, you’d be forgiven for thinking all was well. But when you really add that up, that’s £6000 total repayment! Twice what you borrowed! It’s imperative that you have an exact figure in front of you for what, exactly, you will repay in total.

Signing credit agreements or loan agreements is a big deal. Don’t put pen to paper until you know exactly what the terms are in clear and plain English.

Northern Rock Funds Debt Advisers

The nationalised Northern Rock bank’s charitable arm, the Northern Rock Foundation is to fund personal debt advisers in a bid to help those badly affected by the recent recession.

While the recession is at a formal end, its effects are still being felt and it’s hoped that debt advisors could help those who have been adversely affected by the financial downturn to recover or to manage their debts. The funding will take the form of a £1.5 million grant for the Citizens Advice Bureaux in the North East and Cumbria. These two regions were particularly badly affected by the recession and it is hoped that around 8000 people will benefit from the charitable donation to fund such personal debt advice.

The recession meant rising unemployment for many, pay cuts for a number of people and great financial difficulty for companies and families alike. Housing repossessions rose and while the official figures dictate that the recession officlally ended in the final quarter of 2009, the consequences still haunt millions of us.

Free debt advice is one way in which the CAB helps out the 9000 or so people who contact it every single day with financial worries. The grant from the Northern Rock Foundation will ensure that those hardest hit have more access to personal debt advisors through their local Citizens Advice Bureaux.

Posted on in Debt.

Gordon Brown and Debt in Football

If nothing else, the excessive amounts of debt in British football can at least serve to make you feel better about a credit card bill! I mean, a couple of hundred quid is thrown into real perspective when you consider the £700 million owed by Manchester United.

And it seems that even the British Prime Minister has a view on the footballing world’s excessive debts. While acknowledging that it’s far from his place to do a great deal about it, Gordon Brown has commented that, “…this is an issue and it’s an issue football clubs are facing and it’s a worry to supporters and I think the management of football clubs have got to look very seriously at their responsibilities to their supporters, that they have high levels of income from the supporters but the debt levels have been at a leverage level that is too high.”

While Gordon Brown might be distancing himself from the ability to do anything, Sports Minister, Gerry Sutcliffe certainly isn’t. He has already called for the FA to intervene and set regulation around debt levels. He will be meeting with football authorities in the coming weeks to discuss the matter further.

But really, what can be done? For some of the smaller clubs, the debt cannot be controlled, given low income for those clubs in the first place. But for the bigger clubs like Liverpool and Manchester United, who do generate huge incomes each year, these excessive numbers seem like nothing more than poor debt management.

Perhaps these billionaire club owners should attend some of the same  debt management lessons that schools will be giving to the 5 year olds!

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Debt Management Lessons For Children

The Government’s announcement last week, that it intends to introduce Money and Debt Management lessons into the National Curriculum for children as young as five, has been met with mixed reactions. While many believe this to be a potential solution to the personal debt crisis affecting British adults, others believe that we are enforcing overly ‘adult’ and complex themes onto children who simply have not even had chance to just be children.

Were you concerned about debt and money when you were five? Should you have been?

There are arguments on both sides for this matter. On the one hand we know that education is the key to dealing with a number of issues. When STDs and AIDs/HIV in particular rose to prominence in decades past, the nation began a comprehensive secondary education push on the topic (as well as a large marketing campaign). But can we really make money lessons work for children as young as five? Is it fair to expect them to grasp the concept or to even want to? And that will all come down to how these lessons are taught. Of course, if a teacher pulls out a finance guide in black and white and starts chirping numbers, there will be no progress. But if the lessons are made fun, easy to follow and yet challenging too in the right balance, this could have a real positive effect.

We previously have not offered money management lessons for children. Debt management lessons in schools have never been a part of the national curriculum. Instead, at 18, we launch teenagers into a society that lives largely on credit and into the Lions’ Den of lending institutions all too happy, ready and willing to offer copious amounts of credit to these people, whose shiny new credit records have yet to be tarnished. In essence, we give complete financial independence to people who have had no formal education around the topic. And the consequences of getting finance wrong at 18 can haunt consumers for years to come.

Why do we educate children at all? Simply to prepare them for the real world, to get them ready for a job and responsibility. Yet we have previously completely neglected to cover the topic of personal finance and debt management, one of the biggest responsibilities a child leaving school will face.

With that in mind, surely this introduction to the national curriculum of money management lessons for children can only be a good thing. Of course, we will not know how successful it has been for a number of years yet.

Posted on in Debt.

Property Repossessed Every 11.2 Minutes!

Figures released by Credit Action today reveal that a property is repossessed in the UK every 11.2 minutes. That’s 128 individuals or families losing their home every single day in the UK as a result of financial difficulties and a subsequent inability to pay a mortgage. Repossessions under certain circumstances are, unfortunately, unavoidable owing to the fact that secured debts (such as mortgages) cannot be taken care of with a debt management plan, IVA or similar debt restructuring plan.

The other statistics released give a good indication as to the possible cause of this issue, with over 2000 people every single day finding themselves being made redundant in the UK and over 9000 contacting the Citizens Advice Bureau in regard to debt. 1000 seek some sort of formal debt restructuring plan every single day.

The figures are pretty depressing entering the New Year, but there’s good news too. The rise in the rate of unemployment, though it does continue, is slowing down. The recession is expected to have formally ended during the final quarter of 2009 (something that will hopefully be confirmed soon) and the economy is expected to begin a very slow recovery. While it will be a long time before we are enjoying the financial boom of the early 2000s, things are certainly looking up.

This, however, will be little consolation for those whose homes have been repossessed as a result of personal debt or financial difficulties.

Posted on in Debt.

Cash Strapped and Still Spending

Retailers are rubbing their hands this Monday morning, following the last weekend before Christmas. It seems that eager shoppers were more keen even than last year to get out, in spite of adverse weather conditions in many places.

The weekend got off to a spend-happy start with Friday 18th December being the busiest day for cash withdrawals this year. In the house between 12pm and 1pm, the great British public withdrew £24000 every second! And it’s this cash that was used to line the tills of the country’s biggest retailers.

Despite a year that has seen over 700000 jobs lost, the Brits are still happy to spend, spend, spend across the festive season, with John Lewis reporting an increase in sales of 15% on last year! Capital Shopping Centres, the company who own the Metro Centre in Gateshead and a number of others around the country have recorded 7 million people visiting their centres in the last week.

Of course, what remains to be seen is how much of this Christmas spending will return to haunt consumers in the New Year. January is typically a month which sees the highest number of debt defaults. However, experts are warning that, after a financially dismal 2009 and an extremely high number of job losses, that January 2010 could be a record breaker in all the wrong ways.

Posted on in Debt.

Debt Management – Shouldn’t the Government Lead by Example?

As consumers, we are frequently reminded of the importance of exercising sensibility with our money. The average personal debt in the UK is over £30000 and so employing some conservative spending tactics is sound advice.

But if you think that the average personal debt is high, then you’ll probably be somewhat stunned by the public sector net debt of Britain. Yes, that figure is a staggering £829.7 billion. Yes, billion. And it’s rising rather rapidly. To be specific our national debt increased by £4268 every single second. Concerning? You bet.

The people with the power have come under fierce scrutiny, both for the rate at which it is wracking up debt and for the fact that the public aren’t being informed of some of the more concerning forecasts.

There’s a budget deficit of £178bn in the UK right now. Put simply, that means that public spending is £178 billion more each year than the Government income (for example, from taxes) is. And the Government has been criticised for failing to deal with it.

While Government debt is nothing new, our excessive debts are even leading to our “credit worthiness” falling in eyes of other countries. Call this the Government equivalent of credit rating damage. For the first time, recently, lending to the British was considered more risky than lending to Spain. This could indicate some real problems going forwards.

Of course, Government debt in an economic downturn is almost impossible to avoid. But seeing how the Government handles its debt management going forwards will be interesting….

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Debt and Your Health

It probably comes as little surprise to most that debt and money problems can have a serious effect on your health. And debt worries don’t just cause mental health problems, but can have a detrimental effect on your physical health as well.

Stress, clinical depression, anxiety, sleeping problems and a loss of appetite are common amongst those with debt worries and all of these things can result in a negative effect on both your mental and physical wellbeing.

A recent document released by The Forum for Mental Health highlights the severity of the effect of debt on health. It states that half of the people in debt have some form of mental health disorder (obviously ranging in severity from the mild to the more serious). They put this in context by going on to explain that only 14% of those not in debt suffer a mental disorder of any kind. Their research has also found that people who owe money to five or more creditors are six times as susceptible to such disorders and that debt is also deemed by mental health experts to be an official suicide risk for those who suffer mental health problems.

These are particularly worrying statistics in light of rising unemployment. However, the facts and figures aren’t all doom and gloom. The research into the links between debt and health also found that between 84 and 90% of all those suffering debt related mental health problems saw significant improvement in 2 – 4 years when seeking the advice of debt advisors.

Anybody whose health is suffering as a result of debt would be well advised to seek assistance in dealing with the matter urgently. There are plenty of debt solutions and free advice available and seeking such advice out is incredibly likely to improve your state of mind.

Posted on in Debt.