independent

Monday 21 April 2014

Record numbers face court for unpaid bills

THE number of people financially blacklisted for not paying their phone bills almost tripled in the first half of the year, as record numbers of cash-strapped individuals and business failed to pay up on time.

Banks, credit unions and local authorities are all pursuing record numbers of bad debtors to the courts, leading to a 50pc surge in the overall number of people served with registered judgments in the six months to June.

These court-obtained judgments are the most severe legal remedy for bad debts, short of court orders requiring the sale of assets.

As well as the public embarrassment, those hit with registered judgments can find it harder to get loans or mortgages for as long as five years, since the charges feed directly into most credit-rating engines.

Figures compiled from debt watchdog Stubbs Gazette's data shows a total of 2,185 individuals and companies were served with registered judgments in the first six months of the year, up from 1,453 during the first half of 2007.

The total amount owed was €32.6m, giving an average debt of €14,920. The sharpest rises in actions were for relatively low-level debt, with the number of registered judgments served by telecoms companies jumping from 290 to 740, for an average amount of just under €1,300.

And the trends have gotten even worse in July, with the total number of registered judgments more than doubling compared to July 2007, while registered judgments by phone companies almost tripled.

"There could be no clearer indicator about the high level of unaffordable debt in the country," said Consumers Association boss Dermot Jewell.

"I can understand that bills need to be paid, but as we see more people in these situations we need to find less drastic measures to deal with debt."

Judgments

Mobile phone company O2 was responsible for the highest number of registered judgments, serving 472 of them in the first six months, almost four times the number obtained in the first half of 2007.

And the number of people served with registered judgments by O2 in July increased almost five-fold.

"It is an absolute last resort for us to pursue customers through the courts for non-payment of bills," a spokeswoman for the company insisted.

"In the case of non-payment, O2, over a prolonged period of time, makes every effort to communicate directly with these customers and where we know there is an issue with payment, together with the customer we will put in place a monthly payment plan.

"Out of our 1.7 million customers, it is with regret that we have had to pursue a small number in this way."

Banks and financial companies, meanwhile, registered judgments worth €4.5m in the first six months of the year, up 70pc year-on-year, as higher interest rates pushed borrowers to the brink.

County councils were also among the most enthusiastic pursuers of debts, as their registered judgments almost quadrupled last year to €1.175m, largely relating to unpaid rates and water charges.

James Tracey, head of Businesspro which publishes Stubbs Gazette, said a registered judgment could have a "severe" impact on a person's credit rating.

Risk

"Each company or institution has different ways of treating a judgment -- some increase the interest rate because of the perceived higher risk.

"The general consensus is that the detrimental effect of having a judgment registered against you lasts for five years."

Micheal Culloty, of the Money Advice and Budgeting Service, said people finding it difficult to pay their bills should talk to their creditors as early as they can. "Often if you go early on and talk to them about options you won't end up down the legal route," he said.

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