If you’ve received a letter informing you that you’re being served with a CCJ, you might be wondering what it is and why you’ve been the recipient of one.
CCJs are a type of court order that a lender might issue against a borrower if they’ve repeatedly failed to recover money owed. They are often used as a last resort in an attempt to collect a debt that a lender believes they won’t receive without court intervention.
What is a CCJ?
A County Court Judgment (CCJ) is a court order that might be issued against you by a company or person you owe money to (known as a creditor) if the court rules you have to pay it back. If you’ve received a CCJ, it’s likely because you’ve failed to respond to your creditor regarding repayment of a debt, and they’ve asked the court to help them recover the money.
CCJs are available in England, Wales, and Northern Ireland. In Scotland, a decree is considered the equivalent of a CCJ.
It’s essential to note that a CCJ won’t be registered against you without prior notice. Before a CCJ, you will receive several letters informing you of your creditor’s intention to issue a judgment if you don’t pay the debt in full or arrange a repayment plan before a certain deadline.
Having a CCJ can cause serious problems if you were to apply for any other form of credit, such as a loan, mortgage, credit card, bank account, or even a phone contract. For that reason, it’s recommended to respond to all letters about a CCJ as soon as possible – even if you don’t think you owe the money you’re being asked to pay.
Furthermore, if you have any other debts and financial obligations in addition to the CCJ, these will need to be dealt with separately. CCJs for debts over £500 can also be escalated to the high court for high court enforcement officers to collect.
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How does the CCJ process work?
The CCJ process usually follows the same set of steps, regardless of who your creditor is and how long the debt has gone unpaid.
First, you’ll receive a CCJ claim form (also known as a county court claim form or an acknowledgement of service form) in the post with a reply form attached. If you agree to owing the debt and the amount stated on the claim form is correct, you must provide details of your income, living costs, debts, and court judgments, and make a suitable offer of payment for a district judge to review.
For debts regulated by the Consumer Credit Act (1974), a CCJ must be preceded by a warning letter, such as a default notice, at least 14 days before any action is taken. This includes credit cards, store cards, personal loans, payday loans, catalogues, and store cards.
However, if you don’t agree to owing the debt or the amount you’re being asked to pay is incorrect, it’s crucial you still respond within the given time limit. The court might arrange a court hearing to allow both you and your creditor to argue your case.
Regardless of how you wish to respond, you’ll usually have 14 days from the day you receive the initial warning letter to return the completed reply form (unless you need to ask for an extension).
If you fail to respond to the claim form before the deadline, you’ll be issued with a judgment in default, which is a ruling made without a hearing because you didn’t provide details of your financial situation. In some cases, this will result in you being asked to repay the debt in full or make monthly payments you can’t afford.
How does a CCJ affect me?
A CCJ can have a profound impact on various aspects of your life, including:
Your credit score
Arguably, the biggest impact of a CCJ is on your credit rating. From the moment your CCJ is registered, it will be visible on your credit report for six years, and your credit score will be negatively impacted.
During this time, lenders will see that you have a CCJ and might be hesitant to lend to you, as it indicates that you might not be in a position to afford another credit agreement.
The only way to get a CCJ removed from your credit report before six years is to repay the debt in full within one month of it being served. However, as a CCJ ages, the less of an impact it will likely have on your credit score.
Your job
In most cases, a CCJ will have no impact on your job, and you should be able to continue your current role as normal.
However, if a potential employer decides to perform a soft credit check before hiring you, they might decide not to hire you on the basis of your CCJ. This is common in the financial services, law, or accounting industries as your job will likely require you to demonstrate a level of personal financial responsibility.
If you’re worried about the potential impact of a CCJ on your current role, it’s advised to review the terms and conditions of your employment contract.
Your home
While a CCJ should have no impact on your living situation, finding a new place to live can be difficult as a landlord or mortgage lender might assume you won’t be able to afford your rent or mortgage payments if you’re struggling to repay your debt.
It can also be challenging to remortgage with a CCJ. Some lenders will only be concerned with when the CCJ was registered, while others will be more concerned about why, especially if it was related to an unpaid mortgage.
Even if you’re able to secure a mortgage with a specialist lender, this will likely be with a much higher interest rate and stricter terms.
How much debt do you have?
Where will my CCJ be visible?
If you’ve been served with a CCJ, it’s normal to worry about where it might be visible and, as a result, who might have access to sensitive information about your finances.
As previously mentioned, a CCJ will be visible on your credit report for six years from the date it’s added. In addition to this, it will be added to a public register called the Register of Judgments, Orders, and Fines for six years.
This Register of Judgments, Orders, and Fines is a central database maintained by the Registry Trust on behalf of the Ministry of Justice. It lists details of all judgments, orders, and fines issued by courts in England and Wales and includes a range of information, including the debtor’s name, address, claim number, and total amount owed.
This can sound daunting, but it might be reassuring to know that most people are unaware that the register even exists. It’s typically only used by people who have a valid reason to check your financial history, such as lenders, landlords, and employers.
There is a small fee of between £6-£10 required to search the register depending on the level of information needed. For example, it costs just £6 to search for a CCJ in England and Wales, but £10 to search all registers in full.
How can I check if I have a CCJ?
While rare, it is possible that you could have a CCJ without even knowing about it. In fact, many people only discover they have a CCJ when they go to apply for a mortgage and their application is rejected because they’ve been unknowingly served with a court order in the last six years.
If you’re worried that you might have a CCJ, there are some checks you can carry out to make sure there’s nothing that could potentially stop you from getting credit. These checks can be particularly helpful if you’re planning on applying for a mortgage or loan in the near future.
Here are the two main ways you can check if you have a CCJ:
Get a free copy of your credit report
The first thing you should do to check if you have a CCJ is to view your credit report from all of the main credit reference agencies (Experian, Equifax, and TransUnion) for free. This should reveal whether you have a CCJ and what its current status is (e.g. settled, satisfied, or unsatisfied).
Search the Register of Judgments, Orders and Fines
Another way to check for evidence of a CCJ in your name is to search the Register of Judgments, Orders, and Fines through the Registry Trust website. This will tell you if you have a CCJ and how much you owe, but it won’t tell you who applied for the CCJ – only the court that issued the judgment can tell you this information.
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Can I stop a CCJ?
There are a number of ways to stop a CCJ, but your options vary depending on whether you admit to owing the money and whether you’re in a position to pay it off in full.
Pay the full amount within one calendar month
If you’re able to repay the amount listed in the CCJ in full within a month of receiving the judgment, it will be considered satisfied and it won’t go on to appear on your credit file or a public register.
This is the best option if the payment terms are reasonable for you as it will stop it from affecting your finances for the next six years. Even if you don’t admit to owing the money, it’s recommended to still pay it if it’s for a small amount as this will allow you to move on from it quicker.
If you repay the debt in full after the month deadline, the CCJ won’t be removed but it will be marked as ‘satisfied’ in the Register of Judgments, Orders, and Fines. This might make it slightly easier to get approved for credit as lenders will see that, although you have a CCJ, you have repaid it in full.
Once you’ve made full payment, you must write to the court to inform them that you’ve settled your outstanding balance. It’s also advised to provide proof of payment from the creditor so the court can be satisfied that you no longer owe the debt.
Apply to get it set aside
If you don’t think you should have been issued with a CCJ or you don’t believe your creditor followed the correct process, you can apply to get it cancelled. This is a court process known as getting it ‘set aside’.
To get a CCJ set aside, you must complete a N244 form and send it to the relevant court. There is a non-refundable court fee of £313 required to do this, which can be waived if you’re on a low income. If you fail to attend court, it might be possible to ask the court to set a new hearing date.
However, it’s important to note that CCJs are typically only set aside if you have good reason and can demonstrate a valid defense against the original claim. For example, if you weren’t given sufficient notice of the CCJ because the claim form was sent to an old address, your creditor missed a key step in the claim process, or an insurance company was responsible for the debt.
What happens if I ignore a CCJ?
It can be tempting to ignore a CCJ in the hopes that it simply goes away and your creditor will stop chasing you for payment of the debt, especially given that a CCJ is automatically removed from your credit report after six years regardless of whether or not it’s paid.
However, if your creditor has already gone to the lengths of getting a CCJ, it’s extremely unlikely that they will go another six years without taking any further action against you.
Here are some of the things that can happen if you continue to ignore a CCJ:
Your creditors can access your financial information
If you’ve ignored a CCJ for some time, your creditor might apply to the court to find out more about your financial information to allow them to determine which course of action, if any, they should take. This is known as an order to obtain information.
Once an order to obtain information has been granted, you’ll be required to answer questions at a court hearing. Failure to attend the court hearing can lead to you being held in contempt of court.
Enforcement agents can visit you
One of the first things a creditor is likely to do when you ignore a CCJ is to apply to the court for a warrant of control. This essentially gives them permission to send enforcement agents (bailiffs) to your home to collect payment of the debt, which you’ll need to pay for in addition to your outstanding debt.
Once a warrant of control has been obtained, you’ll receive a letter giving you one last chance to repay the debt before enforcement action commences. When enforcement officers arrive, they will take control of your goods as part of a ‘controlled goods agreement’ and return to seize the items if you fail to keep up with an agreed payment plan.
The debt can be deducted from your wages
If you’re still refusing to pay your debt, your creditor might apply to the court to issue an attachment of earnings order against you. Once an attachment of earnings is in place, your employer can make regular deductions from your wages in order to repay the debt.
This means that, for a set time, a percentage of your wages will go towards repaying your debt before you get paid. This will usually go on until the debt has been fully repaid, but you must legally be left with a certain amount of your monthly income.
Money can be taken from your bank account
Similar to an attachment of earnings order, a third-party debt order is when your creditor takes money you owe directly from where it is being held (usually a bank account or building society) to stop you from accessing it. The amount of money that can be taken through a third-party debt order is limited to the amount needed to clear your debt.
This type of legal action is not used often, but it could happen if you’ve ignored the CCJ for an extended period of time.
An unsecured debt can be secured to your home
One of the more serious consequences of ignoring a CCJ is the debt being secured to your home with a charging order. If the debt continues to go unpaid after this, your creditor might be able to secure an order for sale, which is when they force the sale of your property to recover payment.
However, an order for sale is only an option if you owe more than £1,000 and will only be used as a last resort in response to continuous non-compliance.
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How can I avoid a CCJ?
Whether you’ve already received a CCJ claim form or you’re worried you might be served with one if your debt continues to rise, there are a number of preventative steps you can take to avoid a CCJ.
Early communication is key. If you can afford to pay anything towards the debt, you must let your creditor know as soon as possible. They might be willing to accept small monthly payments if it means they’ll receive something as opposed to nothing.
Failing that, it’s always worth seeking free debt advice before the court gets involved. They will be able to talk you through your options and advise you on the best course of action for your unique circumstances.
Lastly, you might be able to enter into a debt solution to deal with your unmanageable debt before it escalates to the point where a CCJ is issued. Examples include an Individual Voluntary Arrangement (IVA), a Debt Management Plan (DMP), an Administration Order, and a Debt Relief Order (DRO).
By reaching out sooner rather than later, you should be able to come to an arrangement to deal with the debt in a way that all parties can agree on.
Conclusion
Being issued with a CCJ can be a worrying experience, but you’ll always be given sufficient notice of a CCJ to allow you to settle the debt and avoid a court order being issued.
Responding to a CCJ is crucial to preventing further legal action being taken against you. Even if you don’t agree with the CCJ or the amount you’re being asked to pay, ignoring it will only lead to more serious consequences, some of which can have a knock-on effect on your home or job.
It can be tempting to bury your head in the sand, but communication is key. To avoid a CCJ, keep in touch with your creditor and reach out for free debt advice if you need it.
