The Breathing Space (Debt Respite Scheme) initiative is designed to reduce financial vulnerability by freezing interest, fees, and enforcement for individuals struggling with problem debt for a 60-day period, during which free debt advice is available. This blog predicts the number of, and median value of CCJs prior to the implementation of Breathing Space on 4 May 2021, which can be compared to the reality at a later date. The outcome will be to investigate a relationship between the implementation of Breathing Space as a legislative requirement and a reduction in CCJs.
At Registry Trust, we maintain the Registers of Judgments, Orders, and Fines for the UK and Ireland. We therefore have first-hand, real-time access to judgment data. Using CCJ data from January 2017 to February 2021 (our most recent complete month), we can predict the number of judgments and the median value of judgments in the future. This analysis is categorised into ‘Total CCJs’, ‘Consumer CCJs’, ‘Corporate CCJs’, and ‘SME (Non-corporate) CCJs’.
Exponential smoothing is the predictive method used, which analyses past data trends and seasonality patterns to produce an estimation and confidence intervals (or confidence bounds). The confidence intervals are the range within which the results have a 95% chance of falling within.
Total CCJs in England and Wales
The first graph below shows that, when accounting for all CCJs in England and Wales, the median value is predicted to decrease from £830 in February 2021 (the last known CCJ value) to £791.04 in March 2021. This decrease continues to £786.73 in April 2021. A sharp increase then follows to reach £908.70 in May 2021 (lower bound = £654.69, upper bound = £1,162.71).
The second graph shows the number of CCJs is predicted to decrease continually, from 79,360 CCJs in February, to 75,475 in March; 74,407 in April; and 73,338 in May (lower bound = 19,123, upper bound = 127,554).
The models predict the median value of corporate judgments to increase to £2,607.04 in May 2021 (lower bound = £1,619.59, upper bound = £3,594.48). This follows the pattern of £2,532.00 in February 2021 (our most recent known datapoint), which increases to £2,557.01 in March 2021, then to £2,582.02 in April 2021.
The number of corporate judgments in May is predicted to be 2,869 CCJs (lower bound = -2,088, upper bound = 7,827). This is characterised by an initial increase from 2,897 CCJs in February to 2,996 CCJs in March, followed by a decline through April (2,932) and into May (2,869).
SME (non-corporate) CCJs
The pattern is volatile for the median value of both past and future SME CCJs. The value increases dramatically from February 2021 (£1,239.00) to March 2021 (£1,486.54), followed by a decrease to £1,357.55 in April 2021. From here, a slight increase in the median value is predicted for May 2021, which is predicted to reach £1,390.42 (lower bound = £1,213.60, upper bound = £1,567.23). The narrower confidence intervals increase the likelihood of this prediction being true.
As with corporate judgments, the number of SME (non-corporate) judgments are predicted to decrease from February through to May: February (1,541); March (1,536); April (1,512); May (1,489) (lower bound = 613, upper bound = 2,364). It is possible that the current UK wide initiative to protect SME’s will facilitate even lower SME CCJ rates than expected.
As with SME CCJs, the predicted median value of consumer judgments does not follow a linear pattern. The median value is predicted to increase to from £801.00 in February 2021 (our last known data point) to £865.94 in May 2021 (lower bound = £628.50, upper bound = £1,103.39). This change is characterised by a decrease in March 2021 (£765.38) and April 2021 (£750.63), followed by a dramatic increase into May 2021.
As with the number of corporate and non-corporate CCJs, the number of consumer CCJs is predicted to decrease from February levels (the most recent known CCJ level at 74,922) to 70,944 CCJs in March, 69,962 CCJs in April, reaching 68,981 CCJs in May (lower bound = 18,035, upper bound = 119,927).
The overall theme suggests that the number of judgments is likely to decrease for consumer, corporate, and SME (non-corporate) judgments. Meanwhile, the median value of judgments is predicted to increase. This increase in median value could be expected due to inflation, and the steady increase in living costs.
However, contextual factors are not accounted for in these predictions. The introduction of Breathing Space legislation and its aim to reduce bad debt may reduce both the number of CCJs and median value of CCJs to lower levels than currently expected. We must of course take into account the fact that some firms/sectors already offer Breathing Space as part of their existing Codes of Conduct so it may be that the impact of this becoming legislation is not as great as expected.
These predictions will be reviewed in June 2021 in the second blog post of this series.
A mentioned in our previous blogs, our public website Trust Online has a bank of ‘Help Topics’ with answers to common questions about CCJ debt, including how to check for and deal with it before it becomes a problem.
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