Guide to CCJs
A person may receive a county court judgement (CCJ) when they fail to repay monies owed to their creditors in good time. This guide explains exactly what a CCJ is, when one might be issued, and the impact it can have.
What is a CCJ?
A CCJ is a court order that is applied for by a creditor when someone fails to repay money they owe. The court will decide if there is a debt owed to the creditors, and if there is, they will issue a CCJ, which sets out how much the person owes, how much needs to be repaid, and over what period of time. Once granted, a CCJ allows the creditor to take further action against a debtor, so its importance should not be underestimated.
A CCJ only applies in England Wales, and Northern Ireland. In Scotland, there is a similar court order, known as a ‘money judgment’.
When would you get a CCJ?
A CCJ is never issued out of the blue; there is a strict process that creditors have to adhere to prior to taking any court action.
Anyone who fails to pay money owed to creditors, or fails to come to an agreement on how to repay the debt, will receive several warning letters from their creditor, culminating in a formal ‘default notice’. Under the Consumer Credit Act, the creditor is legally obliged to send this notice at least 14 days before any further more official action is undertaken.
The default notice will include details of what the creditor expects in terms of repayment – for example, whether they want the entire debt repaid immediately, or whether they expect you to catch up on any arrears and make regular payments from now on.
It is always advisable to contact your creditor once you have received a default notice, to make arrangements to repay your debt, at an amount you can realistically afford.
N.b. The courts will assume that any letters sent by your creditor using standard class mail have arrived.
Court claim for money
If the default notice is ignored, or you cannot come to an agreement with your creditor about the repayment terms, your creditor may apply to the court for help recovering the debt. You will then be issued with a County Court Claim form, previously known as a ‘summons’.
This claim form will be sent to you by post and will include details of the credit agreement in place and the amount of debt owed. You have 14 days to complete and return the form to the County Court.
Responding to a court claim
The entire claim pack you will receive consists of four forms: an N1, which is the claim form and sets out the amount owed, the creditor, and which court is handling the case, an N9A, the admission form, an N9B, the defence form, and the Acknowledgement of Service form.
If you disagree with the amount of the debt stated on the N1 form, or if you do not owe the money at all, you should not ignore the claim form (as a CCJ will be issued against you by default, and extra court fees will be applied to your debt), but rather you need to explain the issue on the Defence Form (N9B) and return it to the courts in good time.
If you agree that the debt is indeed yours, but you cannot afford to repay the debt in the terms set out on form N1, you will need to fill out your income and expenditure particulars on the N9A form and state how much you can afford to repay.
If you need additional time in which to fill out the form, you can complete the Acknowledgement of Service part of the form, which allows an additional 14 days to respond.
Judgement for claimant
The courts will judge on whether the debt is payable at all (if it is disputed), and will decide on payment terms for the debt, by taking into account your financial situation (your income and outgoings). This judgement will be set out in a registered County Court Judgement (CCJ) and will appear on the Register of Judgements and on your credit file for a period of 6 years (unless you settle the claim within 28 days of the judgement date).
Once the CCJ has been registered, you will receive a letter called a ‘Judgement for Claimant’. It will list the amount to be paid every month and how long for.
If a CCJ was registered after 1st October 2012, a creditor can apply for a ‘Charging Order’ to be placed on your property (effectively securing your property against the debt), even if you have kept up with all the repayments. A charging order is registered at the Land Registry and means that you cannot sell your property without first paying off the debt.
What does a CCJ mean for you?
CCJs can have a major impact on someone’s ability to get a mortgage, loan, credit card, or even a mobile phone contract.
Once the debt has been fully repaid, the CCJ will be recorded as ‘satisfied’. While this demonstrates that the debt has been paid back, it will still have a negative impact on your credit score.
If you don’t keep to the terms of the CCJ, , the creditor can go back to court to take further ‘enforcement action’, including sending bailiffs to your home to remove assets (authorised either as a ‘court order’, ‘warrant of control’ or ‘writ of control’, depending on the type of debt owed), taking money directly from your earnings (‘attachment of earnings order’), taking money directly from your bank account (‘third party debt order’), or securing the debt against your home (‘charging order’), if they have not done this already.
How to avoid getting a CCJ
With the consequences of getting a CCJ potentially very severe, it is important to avoid getting a CCJ at all costs.
When falling behind with your monthly payments, whether this is a mortgage, loan, credit card, or even utility bills, it is essential that you speak to the creditor as soon as possible. Most companies are very understanding, and will often arrange a more affordable alternative payment plan.
If financial obligations are ignored, and payments start being missed, you will inevitably receive letters from the lender, including the default notice mentioned above. When this happens, you do need to contact the creditor as soon as possible to avoid any further more formal action being taken.
It is always good financial sense to save some money and accrue interest, but if you have debts you cannot pay, it is worth using savings to avoid receiving a CCJ.
Anyone who is struggling to meet their financial obligations should seek free professional advice from the various companies operating in the UK, such as StepChange, National Debtline, the Debt Advice Foundation or Payplan.