In figures released by the Registry Trust earlier this year, data showed that 84% of the County Court Judgements (CCJ) issued were deemed as unsatisfied. This means that only 16% of CCJs were recorded by the courts as being satisfied for the year between 2020 to 2021.
County Court Money Claims are often seen as the very last resort when a debt goes unpaid. A file is submitted to the county court and the claimant pays a fee which starts from £35 for small claims. The debtor is then sent documents by the court requesting payment. If no payment is forthcoming then a default judgment can be issued.
This will usually order the debtor to pay the sum owing plus interest and costs. The CCJ will remain on the debtors credit file for 6 years but it is not deemed a criminal offence if they ignore the court order.
According to some experts, the current system is unfit for purpose especially for lower value debts. It is estimated that around 50% of small claims issued in the County Courts of England and Wales are for £500 or less.
Many Corporates and large Businesses are now turning to debt collection agencies as a means of ‘damage limitation’. The cost of issuing claims for businesses is more expensive than ever. With tricky Civil procedure rules also, it can be a timely and expensive exercise for small businesses and individuals alike.
One London based solicitor told us that he advises clients not to consider issuing claims for anything under £5k as it is simply not worth the time or trouble on the bigger scale.
Debts over £10k are now subject to a 5% court claim fee, further inflating the cost and risk to the issuer.
Chris Spencer from leading B2B Debt Collection specialists Federal Management commented “The current system hinders Small Business Debt collection efforts. The whole process, time, fees and stress it causes Business owners is excessive.”
“We are all too familiar with unpaid CCJs and every day we receive contact from Businesses at their wits end. They acted in good faith to try and remedy the situation but still ended up not getting paid.”
“Whilst a County Court Judgment ratifies a debt, it does not ensure payment. This is why we offer a free pre-action assessment to all our clients and view court action as a very last resort once all other avenues have been exhausted and there is reasonable belief of a successful enforcement if the CCJ is not paid.
“Less than 1% of the cases Federal Management deals with require any form of court action”
In Scotland a debt can be recovered by a different method known as ‘enforcing a debt by diligence’