If you owe money to an individual or business, they can apply for a County Court Judgement (CCJ) to force you to repay what you owe.
Once a CCJ has been issued, it’s important to stick to the terms of the judgment and make payments as laid out by the court to avoid further legal action.
What is a CCJ?
A County Court Judgment (CCJ) is a type of court order an individual or business (creditor) can issue against you to force you to repay a debt.
Most unsecured debts can lead to a CCJ, such as credit cards, personal loans, and utility bills. For debts owed to local councils, such as outstanding council tax debts, another form of legal action, known as a Liability Order, will be used to collect payment.
Usually, you will receive a CCJ after you have several missed payments and have ignored requests from your creditor to come to an agreement over how to repay the debt.
How does a CCJ work?
Before a CCJ can be issued, there are certain steps both you and your creditor must follow:
Letter of claim
If your creditor applies to the court for a CCJ, you will receive a letter of claim in the post outlining how much you owe, who you owe, and how long you have to make payment.
The letter will come with a reply form enclosed which must be completed and returned to the court within 30 days.
Even if you know you can’t afford to repay the debt in full, you may still be able to avoid court action if you can agree on an alternative repayment plan.
Default notice
If you ignore a letter of claim or don’t come to an agreement over how to repay the debt within 30 days, you will receive a default notice.
This is a letter warning you that your credit agreement will default and legal action will commence unless you make up for missed payments within 14 days.
For debts regulated by the Consumer Credit Act 1974, such as credit cards, personal loans, and store cards, your creditor is legally required to send you a default notice before taking legal action against you.
Receiving a default notice doesn’t necessarily mean legal proceedings have already begun, but it can be your last chance to negotiate a repayment plan before being served with a CCJ.
Claim form
If you still can’t come to an agreement with your creditor over how to repay the debt, you will receive a claim form informing you that legal action is being taken.
The document will come with other forms enclosed that you must complete and return to the court within 14 days. The forms you complete will depend on whether you agree with the amount stated on the claim form, you don’t agree with the amount stated on the claim form, or you don’t believe you owe anything towards the debt.
When you receive a claim form, it’s important to respond as soon as possible. If you don’t provide details of your income and expenditure, the court won’t be able to take your financial situation into consideration and you may be ordered to repay the full amount immediately.
Judgment
Once the court has reviewed all evidence, it will either issue a CCJ forthwith, meaning you must pay the full amount immediately, or a CCJ in instalments, where you repay the debt over time.
Usually, if you admit to owing the debt and suggest a monthly repayment plan, the court will issue a judgment in instalments based on what you can afford.
However, if you know you won’t be able to afford the payment terms you have been given, you will have 14 days to ask the court to review their decision – this is known as a redetermination.
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How long does a CCJ last?
Once you receive a CCJ, it will be added to your credit file from all credit reference agencies for six years – even if you pay it off during this time.
It will also be added to the Register of Judgments, Orders, and Fines from the Registry Trust, which is a public register of all court orders issued in the UK, for six years.
The only way to stop a CCJ from appearing on your credit file and the public register for six years is to repay the full amount due within 30 days of receiving the judgment.
If you repay the full amount after 30 days, it will still appear on your credit file and the public register for six years but will be marked as ‘satisfied’.
How will a CCJ affect my credit rating?
When a CCJ is added to your credit file, your credit rating will automatically drop. The missed payments that led to the CCJ will also be noted on your credit file and impact your credit score.
Because a lender will check a debtor’s credit record whenever they make an application for credit, a CCJ on your credit file can make it difficult to get further credit, such as a mortgage, loan, phone contract, or even a bank account.
Even if your application is approved, you may be asked to pay a larger deposit, get a guarantor, or pay higher interest rates to cover your lender in the event you don’t pay.
What happens if I don’t pay a CCJ?
When you have a CCJ, it’s important to pay it or come to an agreement over how to pay it as soon as possible.
Whether you don’t think you owe the money or just don’t have the funds to pay it, ignoring a CCJ will put you at risk of further legal action.
Here are some things your creditor can do if you don’t pay a CCJ:
Hire bailiffs to collect the debt
Usually, the first thing a creditor will do when you don’t pay a CCJ is hire bailiffs to collect the debt on their behalf.
Bailiffs can visit you at home and ask you to repay what you owe in full or seize goods to sell at auction to recover the money owed. They will give you seven days’ notice before they visit.
If your CCJ is for debts over £600 and has been transferred to the High Court for enforcement, you may be visited by High Court Enforcement Officers (HCEOs) who have greater powers than other court officers to recover the money owed.
Take the money directly from your wages
Another common tactic a creditor may use to get you to repay money you owe is to take the money directly from your wages or benefits. This is known as an Attachment of Earnings Order (AEO).
Once an AEO has been issued, your employer will be instructed to deduct a certain amount from your wages each month before you get paid.
The monthly amount will be worked out as a percentage of your earnings and you’ll never be left with less than 60% of your net income.
Freeze your bank account
If a creditor believes you have the funds to pay a CCJ but are choosing not to, they can freeze money held in your bank account or building society, preventing you from accessing it. This is called a Third Party Debt Order.
Often, a creditor will apply to the court for an ‘order to obtain information’ which will give them details of your current financial situation, including your bank account.
They can then freeze your bank account if they know you are expecting a large payment, such as a bonus or inheritance, that would easily cover the debt.
Secure the debt to your home
One of the more serious actions a creditor can take against an unpaid CCJ is to secure the debt to your home, like a mortgage.
This is known as a Charging Order and essentially means that, if you sell or remortgage your home before the debt has been repaid, the money will be used to pay off the debt.
Once the debt has been secured to your home, your creditor can also apply for another court order called an ‘order for sale’ that can force you to sell your home.
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Can I get a CCJ removed from my credit report before six years?
Usually, a CCJ will stay on your credit file for six years regardless of whether you pay it or not during that time.
However, there are some situations in which you may be able to get it removed earlier:
Pay the full amount within 30 days
The quickest way to get a CCJ removed from your credit report is to pay the full amount within 30 days of receiving the judgment.
Once you’ve repaid the debt, you must write to the court explaining that you’ve paid the full balance. This will require a signature from your creditor but, if you can’t get this information, you must still send whatever evidence you can, such as a copy of your bank statement. The court will then try to contact your creditor to verify your claim.
This will get the CCJ removed from your credit report and the public register as if it never happened and you will be free to get on with your life.
Apply to get the CCJ set aside
Another way to get a CCJ removed from your credit report is to apply to the court to get it cancelled or ‘set aside’.
The court will only agree to set aside a CCJ if you have a genuine reason for not owing the money, for example, if your creditor didn’t follow the right procedure when applying for the judgment or you weren’t given an opportunity to put in a defence.
This will also require a court fee of £275 so you must only make an application if you are confident you don’t owe the money.
Once the court has reviewed all the evidence, it will decide whether you have grounds to get the CCJ set aside.
How long can I be chased for an unpaid CCJ?
The Limitation Act (1980) outlines how long a creditor has to take legal action against a debt before it becomes a statute barred debt. This is known as the limitation period and for most debts, including CCJs, it is six years.
The only way your creditor can continue chasing you for an unpaid CCJ after six years is if they apply to the court to extend the judgment before the limitation period expires.
However, they must have a good reason for requiring an extension and will usually be asked to explain why the debt wasn’t collected within the six-year limitation period.
Furthermore, while a CCJ will automatically become statute barred after six years, your creditor will be free to take legal action against you at any point during this time. So, even if you haven’t heard from your creditor in over five years, they can still take legal action up until the six-year deadline has expired.
Do I have to tell lenders about a CCJ after six years?
Once six years have passed, all traces of a CCJ will be removed from your credit file and the public register – regardless of whether it was paid or not.
When you apply for credit after this time, whether it’s a loan or mortgage, you don’t have to tell lenders that you had a CCJ.
Some lenders may ask if you have had a CCJ in the past, however, and you must be open and honest about any past financial struggles or debt problems you’ve had.
Conclusion
When you receive a CCJ, it’s important to pay it or come to an agreement to pay it as soon as possible.
When you ignore a CCJ, your creditor can take further legal action against you to get you to pay and this could involve sending bailiffs to your home to seize your belongings.
After six years have passed, your CCJ will be removed from your credit file and the public register regardless of whether it has been paid.
Paying the CCJ within this time won’t get it removed (unless it’s within the first 30 days), but it will get it marked as ‘satisfied’ which can increase your creditworthiness in the eyes of a lender.
Remember, a CCJ can only be issued for certain types of debt. For debts owed to local authorities, such as council tax arrears, you will likely be issued a Liability Order instead.
