Unpaid debts will result in court judgements

| April 7, 2008 | 0 Comments

Accountants KPMG are predicting that a million county court judgments will be issued this year, up from almost 800,000 in 2007 and nearly double the 538,383 judgments recorded in 2004.

County court judgments relate to unpaid debts including on credit cards, personal loans, car loans and store cards. They are often followed by visits from bailiffs, who can seize property in order to enforce the courts’ decisions.

Over 2,700 individuals each day are struggling as they cannot afford to keep up on loans, credit card payments and utility bills. Research from KPMG said a decade-long borrowing binge has pushed personal debts beyond a record £1.4 trillion.

The situation is being made worse by a the tightening of lending criteria. Nearly 1,000 mortgage products have been withdrawn from the market in the last week alone, with the number available more than halving since last year.

Mark Sands of KPMG said everything points to more pain for the consumer, which will translate into increased county court judgments over the course of this year.

If county court judgments go up anything like as quickly as we expect bankruptcies to go up, we could easily see a million of them this year. Mr Sands expects personal insolvencies to soar to a record 130,000 in 2008.

Mike Gerrard of accountants Grant Thornton said we always expected to see high insolvencies in 2008, but the credit squeeze has come on top of everything and will, if anything, make things even worse.

You can expect to see personal insolvencies up in 2008 and one wouldn’t be surprised to see county court judgments going in the same direction I would expect a considerable increase, added Mr Gerrard.

According to the Lib Dems, 60,000 families are spending over 75% of their disposable income each month on mortgage payments. Rising utility bills and council taxes increases could push many into repossession.

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