If you have unpaid debts, the person you owe (your creditor) might apply to the court to issue you with a County Court Judgment (CCJ), ordering you to make up for the missed payments.
It’s important to take this action seriously as ignoring a CCJ can lead to further legal action being brought against you.
However, what will happen to you and your finances if you ignore a CCJ? And, how long can you realistically get away with ignoring a CCJ?
What is a CCJ?
A County Court Judgment (CCJ) is a type of court order that might be registered against you if you owe someone money and don’t pay it.
It can only be used to enforce unsecured debts, which are debts not tied to an asset and don’t require collateral (e.g. a home or a car) as security.
The kinds of debts that CCJs are typically issued for include personal loans, utility bills, and credit cards.
For more serious debts, such as outstanding council tax debts owed to local authorities, a ‘Liability Order’ is usually used.
CCJs can only be issued in England, Wales, and Northern Ireland. Scotland has a similar procedure, known as a ‘decree’.
In most cases, a CCJ is only considered after other forms of debt enforcement have been unsuccessful and your creditor requires legal help to recover the money owed.
Once you’ve received a CCJ, you must repay the debt as instructed by the court.
How does the CCJ process work?
If you knowingly have unpaid debts, knowing how a CCJ works can help you know what to expect in the event your creditor takes legal action against you.
We’ve outlined the basic steps of a CCJ below:
You receive a letter of claim
The first time you’ll be informed of a CCJ is when you receive a document known as a ‘letter of claim’ from the court.
This document will clearly outline how much you owe, how to pay the debt, and when you should pay.
It will also come with a reply form attached, which you must complete and return within a specified timeframe (usually 30 days).
It will ask for details of your income and expenditure and will be used to determine how you should repay the debt.
Even if you can’t afford to pay anything towards the debt, you must still respond to the letter of claim as soon as possible to let the court know where you stand financially.
You’re issued with a default notice
If you don’t respond to the letter of claim within the 30-day window, your creditor will be free to issue you with another document known as a ‘default notice’, which is a formal letter confirming that your account is at risk of being closed due to recurring non-payment.
This will happen if you ignore the letter of claim or don’t come to an agreement over how to repay the debt.
In most cases, a default notice will be your final chance to settle the debt before legal action is taken.
For debts regulated by the Consumer Credit Act (e.g. credit cards, store cards, personal loans, catalogues, overdrafts), you must receive a default notice giving you a final chance to make up for the missed payments at least 14 days before a CCJ is issued.
You’re served with a claim form
If both a letter of claim and a default notice don’t help you reach a resolution about how best to deal with the debt, the court will serve you with a ‘claim form’.
The claim form will come with several forms attached – the ones you complete depend on whether you agree with the judgment.
It’s important to seek expert advice at this stage if you have any questions or don’t know how to proceed.
The court makes a judgment
Once you’ve submitted your response, the court will review your answers and issue one of two options: a judgment forthwith (where you’re ordered to pay the debt in full) or a judgment in instalments (where you’re ordered to pay the debt in fixed monthly amounts).
If you don’t respond to the claim form within the given deadline (usually 14 days), the court will issue a judgment without any knowledge of your financial situation.
This might mean you’re asked to pay 100% of the debt immediately or make monthly payments you can’t afford.
However, if you respond with an offer of payment, you’ll likely be issued a judgment in instalments based on what you can comfortably afford.
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How will a CCJ affect my credit score?
Unfortunately, a CCJ will negatively impact your finances – and particularly your credit score – in several ways.
For example, from the date a CCJ is served, it will be added to the debtor’s credit record from each of the main credit reference agencies for six years.
this time, lenders will be able to see the CCJ and it will be difficult to get approved for a personal loan, mortgage, credit card, phone contract, and even a bank account.
This is because a CCJ proves that you’ve had unpaid debts in the recent past and could potentially default on future credit agreements.
Some lenders will agree to give you credit, but you may have to use a specialist lender and you’ll likely face higher interest rates and stricter terms to counteract the extra risk.
There is no set amount of points your credit rating will drop when you have a CCJ, but you should expect to lose around 200 to 300 points in addition to the points already lost due to the missed payments that led to you being issued with a CCJ in the first place.
CCJs also appear on a public register called the Register of Judgments, Orders and Fines for six years.
This is an online database containing information about all individuals with CCJs, such as their name, last-known address, date of judgment, debt level owed, and status of judgment.
What happens if I ignore a CCJ?
If your debt has got to the point where you’ve been issued with a CCJ, you can face serious consequences for continuing to ignore it, including:
Bailiffs will visit you at home
One of the first things likely to happen when you ignore a CCJ is that your creditor will apply for a ‘Warrant of Control‘ which allows them to instruct bailiffs (enforcement agents) to visit you at home and collect payment of the debt. They must pay a court fee to do this, which will be added to your total debt.
If you can’t pay, they’ll make a list of high-value items that they can sell to recover the amount owed, which they will return to seize if you don’t stick to an agreed payment plan.
This is called a ‘controlled goods agreement’.
The money will be deducted from your wages
If you still refuse to pay what you owe, your creditor might apply to the court for something called an ‘Attachment of Earnings Order’, which gives them permission to make regular deductions from your wages before you get paid to recover the debt.
The amount deducted depends on how much you earn, but you’ll never be left with less than 60% of your net income.
It will then be sent to court before being passed on to your creditor.
The money will come out of your bank account
Another consequence of ignoring a CCJ is your creditor taking the money directly from whoever is holding it (usually your bank account or building society) under something called a ‘Third-Party Debt Order’.
In some cases, it works in a similar way to an Attachment of Earnings Order and your creditor will ask your employer, pension provider, or insurance company to give them the money instead.
You will be made bankrupt
If you owe £5,000 or more, your creditor can petition to the court to make you bankrupt. This carries serious consequences.
Once the bankruptcy is filed, you’ll be forced to hand over control of all your assets, including your home and any vehicles, to your creditor.
The bankruptcy will also be listed on your credit record for six years, damaging your credit score and making it difficult to borrow further credit.
The debt is secured to your home
One of the most serious consequences of ignoring a CCJ is the debt being secured to your home with a ‘Charging Order’.
If the money still isn’t paid, your creditor will be free to secure an order for sale, which gives them permission to force the sale of the property.
However, because this is such a significant step, it’s only an option if you owe £1,000 or more and as a last resort due to continual non-compliance.
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Conclusion
County Court Judgments (CCJs) are a type of court order that you could be issued with if you continue to ignore an unpaid debt.
If you’ve been served with a CCJ, it’s not advised to continue ignoring your creditors due to the wide range of consequences that can arise.
One of the first consequences of ignoring a CCJ is being visited by bailiffs at your home. They will ask you to repay the debt or seize items that they can sell to recover the amount owed.
It’s important to respond to any letters about your CCJ as soon as possible – even if you can’t afford to repay the debt in full. Continuing to ignore a CCJ will result in further legal action being brought against you.
