What is a CCJ?
When you’re facing financial difficulties, you’ll almost certainly be getting letters and phone calls from the companies you owe money to. In these letters, they’ll explain what might happen if you don’t pay what you owe – and one of these consequences will probably involve a ‘CCJ‘.
A County Court Judgment (CCJ) is an order from a court instructing you to pay back you owe.
Here, we’ll explore CCJs in more detail. We’ll look at:
- What a CCJ is and how they work
- What happens if you don’t pay a CCJ
- How to avoid or remove CCJs and court action
We’ve also explored some common CCJ questions and answers, so you’ve got all the information you need, no matter what kind of problem you’re facing.
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How does a County Court Judgment (CCJ) work?
It’s useful to think of a CCJ as a final step that a creditor (someone you owe money to) can take to get their money back.
If you’ve fallen behind on repayments for most kinds of debt, the company will try different ways of recovering what you owe. If none of these methods work, they’ll make an application to your local County Court, so a judge can enforce the law and resolve the matter.
The judge isn’t there to automatically take sides – they will simply look at the evidence that’s presented and decide what the next step should be.
In almost all cases relating to arrears (missed payments), you will have signed a contract or a finance agreement confirming that you a liable for the debt, so the court will often rule in favour of the claimant (the creditor you owe) and the County Court judge will order you to pay back the debt. They do this by issuing you with a CCJ.
What happens when you get a CCJ?
Firstly, it’s important not to panic if you’ve got a CCJ or you’re facing getting one. Although we’ve talked about courts and judges – a CCJ is not a criminal offence.
The judge that’s considering the case will decide on the action that should come next. Usually, they will choose one of two possible outcomes:
- A “Forthwith Judgement” – meaning you have to pay all the money to the claimant immediately
- A monthly repayment (sometimes talked about as an “Application for Instalment Order” or “Varying a Judgment”) – meaning there’s a monthly amount to be paid to the court who will then pay the claimant
Over a million CCJs are issued every year in England and Wales. Almost all of these relate to previous orders and fines, or because people have fallen behind on payments they have to make. Cases usually end up in court because the person who owes the debt has not been able to (or not been willing to) pay what they owe.
When you have a CCJ, it is recorded on your credit file shortly after it’s issued, and the court will expect you to pay back the amount that’s decided.
What happens if you ignore a CCJ?
In the early stages of a CCJ, no one can force you to make the payments that have been ordered. However, if you can’t make the payments or you decide not to, the court can take action to remove your options.
The first court action you’re likely to face will involve officially-appointed Bailiffs or Sheriffs visiting your home to recover money or goods to pay off the debt.
If they cannot recover money this way, the court may then move on to making an ‘Attachment of Earnings Order’ – which means they can deduct money directly from your employer or from your benefits payments. Attachment of Earnings Orders often mean you lose a large chunk of what you would otherwise be paid.
Although you may have heard otherwise, you cannot be sent to prison for debt. There are more severe punishments for ignoring what a court demands you do – but again, it’s extremely unlikely you would ever face prison for debt-related issues.
Is a CCJ bad?
A CCJ isn’t good news, but it’s not the end of the world.
Perhaps the biggest impact will be on your credit rating – so it will be much harder to get credit while it’s on your file. Unless you pay it off shortly after it’s issued, a CCJ will show on your credit report for six years.
Aside from that, there’s also the repayment that you’ll have to make. Since there are often late-fees and debt collection fees added to the original debt, the CCJ payment could make life very difficult financially.
Can a CCJ be removed?
It is possible that a CCJ can be issued without you realising. This can sometimes be the case if you’ve moved house and not updated the relevant records or been out of the country.
In cases where you did not receive or did not respond to the original claim from the court saying you owed money, you can ask the court to cancel the CCJ. This is officially known as having the judgment ‘set aside’. You have to complete a claim form for this to be considered – this claim form is known as an N224 Application notice.
As well as the claim form, you’ll be expected to pay a court fee of £255 and go to a private hearing at the court to explain why you do not owe the debt. If the judge rules in your favour, the CCJ will be removed.
How to avoid a CCJ in the first place
It’s better for your financial well-being if you can avoid getting a CCJ in the first place.
It’s very rare that a CCJ would come out of the blue if you’re struggling with debts. You’ll be sent a ‘default notice‘ (along with a Financial Conduct Authority information sheet) by the company you owe 14 days before any action is taken. If you can deal with the debt directly with the company in these 14 days, you may be able to avoid the CCJ altogether.
You can also avoid the CCJ remaining on your financial records for six years if you pay it off within 30 days of it being issued.
Avoiding a CCJ with a government-approved debt solution
Another way to avoid an impending CCJ is to act quickly and explore official debt solutions.
As well as cutting all your payments down into one affordable monthly outgoing and writing off a large chunk of the debt you owe, Individual Voluntary Arrangement (IVA) (or a Trust Deed in Scotland) will also put a halt to proceedings that are being brought against you.
If you’d like more information on how an IVA or a Trust Deed could help, our friendly team will be able to answer your questions. Don’t delay though; you have a very limited amount of time before court action cannot be stopped.