25-34 year olds ‘most likely to have a CCJ’

People between the ages of 25 and 34 are the most likely to have a County Court Judgement (CCJ) or a Court Decree (Scotland) against them, according to new research from the Debt Advisory Centre[1].

Across the UK, 7% of all adults have said they have received a CCJ or a Court Decree in the last 5 years, with 44% claiming they have debts between £1,000 and £5,000 included in the CCJs. Meanwhile, 20% have CCJs for debts of £500 or less.

Melanie Taylor, a debt expert at Debt Advisory Centre, says: “Having a Court Degree or CCJ granted against you is worrying for a number of reasons. At the most basic level it is a clear sign that your finances are in bad shape. Secondly, a CCJ or Decree is going to make it harder and more expensive to borrow money for at least the six years that it remains on your credit history.”

The young debt problem

This isn’t the first time debt among young adults has come to light. In March 2016, a major study from the Money Advice Service and CACI found that one in four people between 25-34 live with debt problems[2]. This is the highest likelihood of debt amongst all age bands and represents the peak of life-time debt problems for many.

So why are young adults at such a risk of debt? Renting a property may be one potential contributor, with the research from the Money Advice Service and CACI showing that renters are twice as likely to be in debt compared to those that own their own home (25% vs 12%). With research from PwC revealing that just 26% of 20-39-year-olds in England will own a home by 2025, it’s safe to say that young people make up a large proportion of renters and are therefore potentially financially vulnerable[3].

Another contributor to debt may also be having children. The Money Advice Centre and CACI found that having children increases the probability of debt by 50% and the more you have, the more risk you’re exposed to. In fact, 19% of families with 1 or 2 children have too much debt, but this increases to 26% among those with 3 or more kids[4].

Getting your finances in order

Whether you’re trying to avoid a CCJ/Court Decree or you’re trying to recover from one, the most important thing is to have a plan for getting your finances in order.

Use your credit report and score to get a better picture of your debts and existing credit. If you have CCJs, these will show up on here too. Once you understand what you owe, you can start to think about creating a new budget and pay-back plan. To learn more, check out 5 tips for dealing with bad debt to improve your credit score.

If you’re struggling with debt but yet to receive a CCJ/Court Decree, Ms Taylor from the Debt Advisory Centre recommends speaking directly to the lender or creditor to arrange a new payment schedule. This can help you avoid getting a CCJ in most cases. You can also work with a debt advisor to put a formal plan in place, such as a debt relief order, and if you use certain formal debt solutions, creditors are unable to take legal action against you.

[1] 3Gem Research carried out online interviews with a nationally representative sample of 2,000 people between 29th June and 6th July 2016. Figures extrapolated based on ONS UK adult population estimates for 2013 of 50.3m.

[2] CACI took a sample of adults known to be over-indebted, and identified characteristics where they differ from adults who are not over-indebted. They used these characteristics to build a model that can predict how likely someone is to be over-indebted, which was applied across the country to produce national and regional estimates of over-indebtedness.

[3] PwC, UK Economic Outlook report, 2015

[4] A Picture of Over-Indebtedness, Money Advice Service and CACI, March 2016. Over-indebtedness is defined as where a respondent answers that they find meeting their monthly bills/commitments a heavy burden and/or that they have missed bill payments in three or more months out of the last six months.