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CCJs: ‘The lender has to draw a line in the sand somewhere'

CCJs lender has draw line sand somewhere

Borrowers cannot expect lenders to ignore county court judgements (CCJs), despite some being unfair, a master broker has warned.

Last month, Baroness Ros Altmann, a former minister of state for pensions, told the House of Lords that every day approximately 2,000 people receive a CCJ that they know nothing about and cannot defend themselves against.

The baroness urged ministers to create stricter CCJ procedures, such as requiring firms to prove they have contacted the recipient at their current address.

However, Martin Stewart, director at London Money Loans, has argued that borrowers cannot expect lenders to forget about CCJs, despite many being unfair.

“The issue is more the ease [with] which they can be slapped against someone's house for something relatively innocuous and, in many cases, [done] so unfairly,” Martin admitted.

“[But] unfortunately the lender has to draw a line in the sand somewhere.

“If we start granting three wishes just because someone has a CCJ, then we may as well just not bother credit referencing anybody.”

Instead, Martin suggested that borrowers should do their utmost to avoid missing a potential CCJ.

“Due to the legacy issues that CCJs themselves bring, the moral of the story has to be to take ownership of the situation in order to avoid the problem itself,” he explained.

“This includes paying debts on time, notifying creditors of any issues you may have in advance and making sure you have a post redirection service in place if you move around.

“Popping the keys back through the letter box doesn't mean a debt jubilee has been granted in your favour.”

Regardless, Jeff Knight, head of marketing at Pepper Homeloans, claimed that the damaging effect of a CCJ on a borrower’s credit history made brokers crucial.

“If the borrower is making a payment towards the debt that resulted in a CCJ, then it would be classed as a commitment for affordability purposes.

“[However,] the borrower may have repaid the debt, but a CCJ remains on their record for six years, long after everything is resolved.”

“That is why brokers are so important for such borrowers, as they will know which lenders would be able to help.”

In August, Jeff revealed that Pepper had experienced an increase in demand for near-prime lending, possibly due to a rise in the number of CCJs.

Indeed, second charge lender Equifinance recently stressed that customers with CCJs are no longer necessarily high risk when it comes to secured loans.

Despite this, Harry Landy, sales director at Enterprise Finance, warned that some lenders may be less welcoming to borrowers with a poor credit history.

“CCJs are, of course, relevant to lenders when making a lending decision, as they can negatively affect a potential borrower’s likelihood to be approved for a loan.

“However, many high street lenders tend to take a narrow view on this and could be quick to decline someone who has unknowingly fallen victim to a CCJ.”

Nevertheless, Harry concurred with Jeff over the importance of brokers in negotiating around CCJs.

“As experts in specialist finance solutions, we … have a panel of lenders who take a different view of clients who have encountered some difficulties resulting in a CCJ.

“This ensures that we can provide a tailored service that is best suited to a client’s individual situation.”

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