Creditors are losing faith in the courts and the ability to enforce judgments even when they are made, according to one of the country’s leading high court enforcement agencies.

The fear of adverse media attention, criticism from the Financial Services Authority (FSA), and serious delays in the time taken for cases to be heard and enforced is resulting in lenders writing off millions of pounds of debts says Claire Sandbrook, CEO of Shergroup:

“The number of applications for many legal instruments of debt collection, including Attachment of Earnings Orders (AEOs), Charging Orders and County Court Warrants of Execution, has fluctuated significantly over the past couple of years, even though in the wake of the recession, more businesses than ever are in need of enforcement assistance to recover monies owed to them,” she says.

“People are just choosing not to pursue those debts through the courts which suggests one of two things: either they are pursuing those debts by other means, which is unlikely, or they are just writing them off and putting it down to experience.

“Whichever it may be”, she continues, “it is of great concern that so many creditors are now lacking such faith in the justice system of this country that they feel their only sensible option is to walk away from the debts that they are owed. That in itself is a damning indictment of our system of enforcement.”

Although applications for AEOs appeared to rise steadily over the course of 2010, in reality this increase only represented a return to previous levels; the figures from late 2010 are roughly the same as those for early 2009. The intervening drop seems to have coincided with the Financial Services Authority (FSA) issuing a report that criticised many lenders for the way that they managed collection of mortgage arrears and repossessions.

Additionally, with Charging Orders, the number of applications in the first half of 2010 declined by more than 8000 when compared with the first half of 2009. Furthermore, between the second quarter of 2009 and the same period in 2010, the number of applications for County Court Warrants of Execution decreased from 65,593 to 35,365.

Claire says that any business pursuing outstanding debts should consider court enforcement as a matter of course: “When carried out properly, court enforcements are a logical step and a positive approach to recovering money that rightfully belongs to you. Businesses should not be reluctant to utilise the legal means at their disposal.”