A County Court Judgment (CCJ) is a county court order which can be made against an individual or a limited company to enforce debt repayment. If it is left unpaid after 30 days, it can have damaging effects on your personal credit rating or the businesses credit file.
Clearly the director/s would not have intentionally arrived at this situation so it is critical to respond to a county court claim against the company promptly and never ignore the claim. It is not unusual for companies to get involved in a dispute over an invoice payment or the quality of goods which results in a court claim.
The danger is where a frivolous claim may be made and subsequently ignored as ‘so outrageous’ but this should claim should be disputed. This dispute will stop the process and the court will have the opportunity to at least hear both sides of the dispute.
As nearly all credit checks for limited companies request a check on a director is of the upmost importance that directors personal credit files are CCJ free.
What is a County Court Judgement?
CCJ stands for ‘County Court Judgement’. It is an order made by the court against someone who owes money (defendant) to another person or company (claimant). The judgment is entered on the ‘Register of Judgments, Orders and Fines’. Organisations such as banks, building societies and credit companies use the information on the Register when someone applies for credit such as a loan or overdraft. It helps them decide whether or not that person would be able to pay the debt back to the company.
What is the process for CCJs?
Before a creditor applies for a CCJ, they must send a letter (sometimes known as a default notice or a letter before action) to the debtor, warning that legal action may be taken if the outstanding debt is not repaid within a minimum of 14 days. If you don’t reply to this letter then your creditor can begin court action without you.
After the creditor has submitted a claim to the county court, the debtor will receive the following:
- claim form – this provides details of the amount of debt which is being claimed, along with any interest
- response pack – this includes an admission form (ie to accept that the money is owed), a defence form (ie to contest a claim) and an acknowledgement of service form (ie to confirm receipt)
A response must be made within 14 days of receipt of these forms – otherwise a CCJ will issued as a default judgment.
What is a County Court Judgment claim form?
If you are in debt, a creditor (or claimant) can attempt to reclaim money owed through the County Court. The starting point in this legal process is the County Court Claim Form, or Summons, which states clearly how much is owed to the creditor and will be sent to you by the Court. When you receive this form it’s vital to act quickly – you only have 14 days to reply.
It will involve filling in an Income and Expenditure Form and making an offer of payment. Ignoring a claim or missing the deadline will allow your creditor to ask for judgment by default- which can mean paying the outstanding debt in full, plus costs. To keep things simple, we can guide you through what to do when you receive this form.
Recognising forms sent by the court
If your debt is regulated by the Consumer Credit Act then your creditor must have already defaulted your initial agreement prior to commencing court action and you should have been notified of this by post.
If you have received forms through the post it is important to check that they are a County Court claim pack. They will include the following:
- N1 Claim Form
- N9 Response Pack
- N9A Admission
- N9B Defence and counterclaim
Each form will have the title printed across the top and the form number in the bottom right corner.
Your forms will show the name of the court you will be held accountable to, your name, your creditors name and account or reference number, and a claim number that is used to identify your case.
Your claim form will show the amount and full details of the debt.
If any of the forms or details are missing you should contact your creditor or the court and have those matters rectified as soon as possible.
What happens if you cannot pay the CCJ?
If you can’t afford to make the payments ordered by the Court you can obtain a form from any County Court or online and make an Application to Vary an Order (N245). This allows you to tell the court how much you can reasonably afford to pay back to your creditor every month once you have taken into account every day living expenditure (i.e. bills and food). If the creditor doesn’t agree to the amount you have stated, then the court will decide how much you’ll repay.
What happens if payments are not made on time?
If you don’t make the correct payments on time, then the creditor can ask the court to enforce payment using one of the following methods:
A Warrant of Execution
This gives a county court enforcement agent the power to visit your home or business to collect the money you owe, or see whether you have any goods to the value of the money which you owe.
If your creditor has asked for a Warrant of Execution, you will usually be sent a letter explaining that if you pay the amount of the warrant to the court within seven days, the enforcement agent will not come to your home or business.
A Charging Order
What is a charging order?, this is court order placing a charge on your property, such as a house or piece of land. The charge order will be for the amount owed to the creditor.
A charge on a property usually means that if the property is sold, the charge has to be paid first before any of the proceeds of the sale can be given to you. However, this charge DOES NOT force you to sell your property.
How does a CCJ affect a persons credit record?
A CCJ is evidence that you’ve not been able to pay a debt, or refused to, and this could have a negative impact on your credit record for six years from the date of the judgement, even if you eventually paid off this debt. Having a CCJ on your credit file will affect your ability to get credit, but its impact could lessen over time, especially if you handle your credit correctly and make your repayments on time.
Can a CCJ be removed from a credit file?
If you pay the CCJ in full within a month of the judgment, you can apply to have the CCJ removed from the public register and from your credit file.
To do this, you need to apply for a ‘certificate of cancellation’ from the County Court hearing centre which issued the judgment, providing them with proof of payment. You do this using court form N443