How have you found the pandemic, financially speaking?


Are you one of those monetary unicorns, emerging debt free, or with a new house, or proudly tending a lockdown nest egg? Or are you, more likely, struggling?


While the government has gone to great lengths to support businesses through the pandemic, the glaring lack of support for people struggling with debt has left it open to criticism. And as some forms of covid support, such as payment holidays, begin to wind down, the Registry Trust has warned the number of County Court Junctions (CCJs) has begun to soar.


According to statistics, the Coronavirus pandemic has resulted in 8.7 million people being furloughed, with their pay docked at 70-80 per cent of their usual wage. A further 730,000 jobs have been lost. And yet, despite this, there is currently no support scheme in place to help those left unable to make ends meet, and now debt organisations such as StepChange and The Money Advice Trust are calling on the government to urgently assist those who have had junctions actioned against them.


The big picture


There’s now little question that the pandemic has caused a spike in debt across the country. More CCJs were served in 2020 than ever before, with 194,203 new junctions taken out against individuals in England and Wales. In the earliest stages of the pandemic, the government made efforts to offer amicable and targeted support to struggling citizens across the board, including those grappling with debt, and encouraged debt collection companies and internal debt management teams to act with restraint. These systems lowered the numbers of junctions actioned significantly, to begin with.


And yet, despite this, the last quarter of 2020 shows an overwhelming surge of cases. Incredibly, 85,000 CCJs were issued in England and Wales between October and December, with companies no longer offering customers the same level of patience. In fact, just last month, 58 CCJs were actioned against staff members at a Grimsby hospital for unpaid parking validations at their own workplace. The result is that debt has morphed into yet another pandemic, reinforced by collectors’ relentlessness.



Last year, the debt advice charity StepChange warned nearly three million people were at risk of long-term debt problems following a drop in income caused by the pandemic. Their research also showed that those on lower incomes, younger people, renters or people with a particular vulnerability (such as a health condition) were more likely to fall behind on the basics like rent and bills during the pandemic.


“The rise in CCJs in the last quarter of 2020 suggests that debt recovery activity is beginning to increase,” explains Jane Tully, director of external affairs and partnerships at the Money Advice Trust, the charity which runs the National Debtline and Business Debtline. “This is at a time when millions of people are struggling with the financial impact of Covid-19.”



However, these judgements have been a point of concern for some time now, even outside the context of a financially exhausting pandemic. CCJs have been on the rise since 2017 and between January and March 2020 – just preceding the pandemic – 112,261 CCJs were administered in England and Wales alone.


26-year-old Amy* says she built up debt in missed bills and interest with an energy provider because of a complicated student house share situation. Sadly, she began suffering from mental health problems and dropped out of university. Evicted from the student house and out of options, she desperately moved into an illegally sublet flat. “That meant I didn’t have a fixed address – the company couldn’t find me to tell me I owed money.”


Eventually, two months after finding a new home to live in, Amy received a letter stating she had a CCJ. “I owed £2,200, but I was earning a grand a month. My rent was £675. It was a ridiculous amount of money.”


Long-term impacts


The main reason CCJs are so debilitating for the receiver is that they remain on offenders’ credit files for six years, profoundly impacting their credit scores and rendering them unable to be accepted for any finance application during this period. This doesn’t just prevent people from taking out loans or applying for credit cards – it can even prevent essentials like setting up a phone contract or applying for a property.


When Amy was served the CCJ, she didn’t know what it was and felt too ashamed to seek help. “Having just dropped out of uni and spent time sofa-surfing and illegally letting a flat because I was homeless, I felt too embarrassed to tell my family. I thought they would just think I literally can’t do anything.”



Amy was finally able to pay off the debt one year later, after moving back in with her mum. Still not knowing what CCJs were and receiving no explanation from the collection team, she then expected she’d never have to think about the debt ever again.


It wasn’t until she applied for a rental property with her now-fiancé that she realised how serious junctions were. “I got a call to say that they’d flagged my CCJ during a credit check and that I was going to need a guarantor. The letting agents were the ones who told me that CCJs stay on your record for six years.


“Because I hadn’t told my family it was a CCJ, I couldn’t ask them to be my guarantor. Luckily, my mother-in-law stepped in and has kept the situation quiet.”


Two years on, she’s in a much better situation, but still feels the CCJ will have a “ripple effect on the future” until the full six years have passed. “To serve a 22-year-old with a six-year ‘sentence’ just for being an idiot is really heavy,” she says. “It doesn’t account for how much your life can change in that time.”


Punishing payments


The Money Advice Trust believes that, with debt currently being experienced by so many, it could be a good time to analyse its impact on people as a whole. “Given the financial challenges facing many households, now may also be a good time to improve the current system for CCJs,” Tully says. “This could include allowing more time for someone to pay, particularly if they have only become aware of a default judgment as a result of applying for credit or when a judgment was sent to an old address.”

Tulley explains that the Ministry of Justice launched a consultation on the effectiveness and appropriateness of the current processes for money claims issued in the County Court back in February 2018. So far, this unfortunately hasn’t had an impact on laws or regulations surrounding how debt is collected.



Meanwhile, the link between poor mental health and debt is one the government can no longer ignore. According to Money Saving Expert, 100,000 people in debt attempt suicide every year. What’s more, a 2013 study launched by Clinical Psychology Review proved that those who died by suicide were eight times more likely to be in debt.


“Due to the ongoing challenges that many households face, it is crucial that creditors continue to provide targeted support for customers in difficulty and signpost to free debt advice,” Tulley advises.


Until that becomes routine, however, the difference between patience and penalty will reverberate for many for years to come.


*Name changed upon request


If you’re worried about a County Court Judgement or finances more generally, contact a free debt advice service like National Debtline as soon as possible.

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