What is a CCJ?
A CCJ (County Court Judgement) is a court order issued to a person or business that has failed to pay money owed to another party.
CCJs apply in England, Wales and Northern Ireland. In Scotland, the process is referred to as enforcing a debt by diligence.
A CCJ generally must be preceded by some form of notification of the debt to the debtor as well as notice from the creditor that a claim is intended to be made to recover the sum owed.
Where the creditor is regulated by the Consumer Credit Act, it is a legal requirement that a CCJ must be preceded by a warning letter or default notice informing you of the amount of money owed.
In addition to this, since 1 October 2017, a new Pre Action Protocol for Debt Claims has been put in place regarding debt claims against individuals (including sole traders). This protocol states that a creditor must send the debtor a letter of claim before they seek a CCJ.
The letter of claim must contain:
- how much money is owed
- details of the related purchase agreement, e.g. both parties involved in the agreement, the date the
- agreement was made
- details of any interest or other charges
- where regular payments are being made, the reason for considering a CCJ
- how the debt can be paid
- reply form
- the address to be replied to
This protocol does not apply to business-to-business debts, and cannot be used to reclaim mortgage arrears or HMRC tax arrears.
The purpose of the protocol is to settle the claim without commencing court proceedings, and where the claim is taken to court, to fully prepare all information required to ensure the claim is handled as quickly and easily as possible.
Where the Pre Action Protocol for Debt Claims applies, both parties must comply with the steps and conditions included in the protocol before taking the claim to court. Failure to comply with the protocol may lead the court to look unfavourably on the non compliant party, or for the court case to be delayed.
How long does a CCJ last?
A CCJ is enforceable for 6 years from the date it was issued. After that, the creditor must ask for the court’s permission to continue to enforce action.
How should you respond to a CCJ claim?
Should you receive a CCJ claim form letter, you have a period of 14 days to respond. Ignoring the letter will not make the problem go away. The court will still rule on the claim but without considering any information or response from you.
The claim form will state the amount of money that the creditor says you owe to them. Accompanying the claim form will be a response pack which includes an admission form, a defence form and an acknowledgement of service.
The admission form is used where you accept that you owe the money. The defence form is used where you dispute the claim. The acknowledgement of service is used to confirm that you have received the documents.
There are 5 ways you can respond to a CCJ:
- You may pay the full amount owed immediately, including any interest and court fees. The claim will not be taken to court and a CCJ will not be added to your credit record.
- You may request to pay in instalments or to delay payment. A CCJ will be issued and noted on your credit record.
- Of course, you may dispute the claim if you believe that you owe less than has been claimed for. If you can pay what you believe to be the correct amount immediately, then do so. Alternatively, you may ask for more time to pay. The court will decide who is correct – you or the creditor. If they rule in favour of the creditor, a CCJ will be issued and noted on your credit record.
- You may also dispute the claim where you believe that you owe nothing.
- You may make a counter claim against the creditor where you believe you are owned money by them.
Within 14 days, you must either:
- return the defence form and the acknowledgement of service, should you dispute the claim
- return the acknowledgement form only, where you need extra time to complete the defence form
- return the admission form to your creditor where you wish to pay
- return the defence form and the admission form to the court, where you accept that you owe some of the money being claimed
Even if you reach an agreement with the creditor without taking the claim to court, you will still be required to return the relevant forms to the court within the 14 day limit.
Must you attend court?
The court hearing is held in private, taking into account information provided by both you and the creditor. You are not required to attend unless you dispute the claim.
What if the court rules against you?
Where the court issues a CCJ, you will be expected to pay the amount either by way of instalments or fully and immediately. Where you have responded to the claim form, your circumstances will be taken into account.
If you feel that you cannot afford whatever payment plan the court suggests, you have the right to ask for a redetermination.
What happens if you don’t obey the conditions of the CCJ?
If you don’t pay the amount owed in accordance with the CCJ, the creditor may request that the court enforce the debt by:
- arranging for a bailiff to collect the monies owed
- securing the debt against your home by placing a charging order on it
- making an attachment of earnings order against you
- making a third party debt order to take the money owed from your bank account
How does a CCJ affect your credit record?
Should you fully pay the amount owing within 30 days of the CCJ being issued, the judgement will be removed from your credit record.
Where full payment does not happen within 30 days, the CCJ will be noted on your credit record at the Register of Judgements, Orders and Fines. This notation will remain on your credit record for 6 years.
Having a CCJ on your credit record can negatively affect your ability to obtain a mortgage, a bank account and credit in any form.
How can you remove a CCJ from your credit record?
Firstly, if you pay the full amount owed within 30 days of the order being issued, the CCJ will be removed from your credit record.
Alternatively, after the 6 year limit, the CCJ will be automatically removed from your credit record, whether you have repaid the amount owed or not.
Finally, where you did not respond to the claim form and the CCJ was the result of a default judgement, i.e. made without your involvement, you may apply to have the CCJ set aside if you can demonstrate that you have a good case against the claim or if you were prevented from responding. Should the CCJ be set aside, it will be removed from your credit record.
Why take legal advice?
Should a CCJ be made against you, taking specialist legal advice can help to clarify your rights, assist you in gathering the required information and responding to the claim, and ensure that you have the best chance possible to protect your credit record, now and in the future.