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What Is A CCJ

What Is A CCJ And How Will It Affect You?

Having legal action taken against you is something you never want to imagine happening. But, for the many people in the UK struggling to make ends meet and keep up with what they owe, if they fall behind on their payments, being taken to court is a very real possibility. CCJs are the main type of legal action taken against those who are unable to repay what they owe. But what is a CCJ, exactly? What happens when you receive one? And how could having one affect you?

What is a CCJ?

CCJ stands for County Court Judgement, which is a type of court order in the UK (except for Scotland) that says you must repay money you owe. CCJs can happen when your creditor – the person or company you owe money to – believes you won’t pay back what you owe to them. They apply to the courts to help them recover the money, and if the courts agree with them, the CCJ is the outcome.

When can I get a CCJ?

By the time CCJ proceedings begin, it shouldn’t be something that comes out of the blue. Legal action is usually a last resort. It usually happens when you’ve been behind on payments for some time and your creditor has reason to believe you won’t pay them unless they take this action. For example, it may be that you aren’t making payments, and haven’t responded to their attempts to get in touch with you. If you’ve been working with your lender to find a way to repay your debt more affordably, or have been making reduced payments, it’s less likely they’d file a CCJ against you as it’s clear you want to repay the money.

Before a creditor can apply for a CCJ, they must send you a warning letter or a default notice. This document will let you know that you need to repay what you owe, and that the creditor intends to start legal action if you don’t. If you owe money under an agreement regulated by the Consumer Credit Act, then your creditor must have sent a default notice to you at least 14 days before they start legal action.

Who can apply for a CCJ against me?

Anybody that you owe money to can apply for a CCJ against you. This can be money that you owe either because you borrowed it, or because you agreed to pay it in return for a service. But, you must have failed to pay as agreed in order for the person or company to be able to apply for a CCJ. Some of the types of people and organisations who could apply for a CCJ against you include:

  • A landlord that you are behind on rent payments to
  • A credit card or loan provider that you have defaulted on your agreement with by not paying
  • A utilities company that you owe money to for electricity, gas, water, or broadband and phone services
  • A friend that you borrowed from but haven’t paid back

What happens when I get a CCJ?

Before a CCJ is issued by the courts, you will receive information about your creditor’s claim through the post. In this letter, you’ll also have the chance to provide information of your own, to have the courts take your position into account when they make their judgement. The letter will ask you to confirm whether you admit the claim or not, which means you need to decide if you agree that you do indeed owe the amount of money being claimed for by the creditor. You’ll also be asked to supply detailed information about your income and expenditure.

If you don’t take the opportunity to supply information about your position, then this won’t stop the court from issuing their judgement. But, they won’t know what you can afford to repay when they make their decision, or whether you believe and can prove that you don’t owe this money. So, their judgement may turn out not to be affordable for you.

When the courts issue their judgement, they will decide when and how you are to repay your debt. They may allow you to pay in a series of instalments, or they may require that you repay what you owe in a lump sum.

If the payments being asked for are more than you can afford, then you can ask the court to reconsider. This is called redetermination. You will also have the chance to dispute the CCJ if you think the claim is incorrect. But, it’s not guaranteed that the court will change their mind.

After the judgement is issued

Once your CCJ has been issued, then it will be added to a public database. This database is called the Register of Judgements, Orders and Fines. You can avoid your CCJ being recorded here if you repay the full amount within one month of the CCJ being issued. If you are able to successfully dispute the CCJ and have it cancelled, then it also will not be recorded.

Once your CCJ has been recorded on the Register of Judgements, Orders and Fines, it will stay there for six years. This register is one of the sources of information that Credit Reference Agencies go to for information about you. They will be able to see your CCJ on the register, and will include the details of it in your credit report. The record on your credit report will include your name and address, the case and court number, and how much money you owe.

Once you repay the balance of your CCJ, then it will be recorded in the database as “satisfied”. This information will be relayed to your credit report, too.

How does a CCJ affect your credit score?

There’s no two ways about it, a CCJ will affect your credit score negatively. A court having to order you to repay what you owe is a strong indicator that you are not able to manage your borrowing, that you are experiencing financial difficulties, or both. Many lenders will not lend to somebody if they see a CCJ on their credit report.

A CCJ will remain on your credit report for six years – the same amount of time as it’s in the Register of Judgements, Orders and Fines. If you repay it, then the record will be updated to say that it’s been repaid, but it will still be listed on your credit report.

Lenders pay less attention to CCJs as they get older, so the impact a CCJ has on your credit score will decrease over time. The impact could be even less if you have paid your CCJ – a satisfied CCJ has less of an effect on your credit score than an unsatisfied one. But, you may still find it more difficult to access all kinds of credit products, from credit cards and personal loans to mobile phone contracts, and that your choice of different lenders and products is limited for the length of time the CCJ appears on your credit report.

What happens if I don’t pay a CCJ?

If you’re not able to pay a CCJ, don’t ignore it and hope it’ll go away. It’s important that if you’re not able to pay what the CCJ is asking of you, that you ask the court to reconsider their judgement and make it affordable for you. If you fail to pay a CCJ, your creditor might ask the court to send bailiffs to collect the money from you. If you don’t have the money, then the bailiffs could take your possessions to sell, and use this money to repay your debt.

Your creditor can also ask that payments be collected from you directly from your wages, which involves making your employer aware of the situation so that they can facilitate this – something the majority of people, understandably, are keen to avoid. Alternatively, your creditor could request that the court freeze your bank account and that money be used to repay your debt, or that you sell property or land and use the proceeds to repay them.

How can I avoid a CCJ?

The simplest way to avoid the risk of court action being taken against you, of course, is to repay what you owe on time. But, life isn’t always simple! If you are struggling to keep up with repayments you owe, or if you’ve fallen behind already, then it’s important that you speak to your creditor. We know that it takes a lot of guts to pick up the phone and have this conversation. But, creditors will always be glad of your honesty. They’ll usually be happy to work with you to find an alternative, affordable way for you to repay them. You may also want to take some formal advice on your situation from a debt advisor. Check out the Money Advice Service or StepChange for more information about this.

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