The number of county court debt judgements filed against individuals in England and Wales grew by 35 per cent in the first quarter of 2017, compared with the same period last year, a study has revealed.
The research, published by the Department of Justice (DoJ), found that nearly 300,000 judgments were filed in the English courts – the highest quarterly figure for more than 10 years.
Debt judgments are issued against borrowers unable to pay debt.
The figures follow warnings that household borrowing is growing at an alarming rate. Several debt charities say the situation could worsen over the coming year as rising inflation and slowing wage growth squeezes household incomes.
Earlier this year, Peter Tutton, head of policy at StepChange, said levels of outstanding borrowing were approaching the 2008 peak, while the growth rate of net lending is at its highest peak since 2005.
“Previous experience shows how such increases in the levels of borrowing can leave households over-indebted and vulnerable to sudden changes in circumstances and drops in income that can pitch them into hardship,” he said.
“Lenders, regulators and the government need to ensure that the mistakes made in the lead-up to the financial crisis are not repeated and that there are better policies in place to protect those who fall into financial difficulty.”
Alarm bells should be ringing, he added.
Joanna Elson, the chief executive of the Money Advice Trust, said: “It is worrying that the number of CCJs issued has been increasing so dramatically.
“The sharp spike in the first quarter follows a general increase we’ve seen in recent years and is likely due to a number of factors including an overhang from the financial crash with debts coming to the end of the period in which creditors can take action, more people now struggling to balance household budgets, and a change in approach by some collection agencies.
“There’s a strong chance that this trend will continue as people feel rising inflation levels eating into their wages.”
Mr Tutton added: “Getting a judgment can have serious knock-on effects, possibly making it more difficult for homeowners to re-mortgage, for renters to secure a tenancy, as well as adding costs and potentially significant levels of stress and anxiety for the borrower. Lenders must do more to support people in financial difficulty.”