A CCJ, or county court judgement, may be something you have never heard of or may be something you are all too familiar with. Either way, information is power, so here is a breakdown of what a CCJ is, why you might receive one, and what to do if you do.
What is a CCJ?
A CCJ, or county court judgement, is a court order in England, Wales and Northern Ireland (in Scotland it is called enforcing debt by diligence). It is registered against you if you fail to repay money that you owe.
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A creditor must first send you a warning letter or default notice if you are behind on your debt payments. There needs to be a period of at least 14 days between when you receive a warning letter and when you receive the county court claim form. You then have 14 days to reply to the claim form.
What do I do next?
The key thing with a CCJ is not to ignore it. If you do, you run the risk of being ordered to repay the debt in one go.
If you receive a CCJ, your first stop is with a free debt advice service. The service will be able to advise you on the best way to respond.
- If you agree with how much you owe: Admit the claim and submit an income and expenditure form, which will show how much money you have available to pay off the debt.
- If you disagree with how much you owe: File a defence.
- If you intend to defend the claim but need longer than 14 days to prepare your defence: Submit an acknowledgement of service.
There are two judgements that you can receive from the court:
- If you have responded to the claim form and given the correct information about your circumstances, it is likely you will receive a judgement by instalments, which will allow you to pay off the debt in an agreed period of time.
- If you have ignored the form, you run the risk of a judgement forthwith, where the whole amount you owe will be due immediately.
It is very important that whatever the judgement, you try to keep to the terms of the CCJ. If you do not you run the risk of bailiff action, a charging order secured on your property, or an attachment of earning order (where the money owed is deducted from your wages).
Your credit future
Receiving a CCJ can have a negative impact on your credit score and make it difficult to obtain a credit card or loan in the future. CCJs remain on your credit record for six years. Often credit card providers specify that they will not consider applications from borrowers who have received a CCJ in the past.
However, all is not lost. If you do manage to repay your debt and your file is marked as ‘satisfactory’, then there are options available to you. There are an increasing number of credit cards now available for borrowers with bad credit. These cards will judge your application on your personal circumstances, so if you have showed yourself to be a good borrower since your CCJ you have put yourself in a better position.
Some of these cards also give you the opportunity to rebuild your credit score by giving you a manageable credit limit at the start, which will then be increased if you make your monthly payments and do not exceed your limit.
It is all too easy to take on too much debt or end up in a spiral of high interest payments and credit card fees. When thinking of taking on a credit card or loan, consider whether you can afford it and make sure you understand what you are signing up for, because the ramifications of not repaying what you owe can be severe.