CCJs or County Court Judgments

Posted by Kevin Pearce in Personal Finance on 6 December 2019 - Kevin is a Senior Credit Analyst at checkmyfile

It’s no secret that the levels of unpaid debts in the UK have been rising over the last few years, as household incomes stagnate and everything else in this world seemingly becomes more expensive. According to Credit Action, debt per adult is over £31,000 – or around 110% of average earnings. It’s also projected to take a whopping 26 years of consistent, minimum monthly payments to clear an average credit card. Debt may be all around us, but what happens when payments can’t be made when they fall due?

What is a County Court Judgment (CCJ)?

A creditor will obviously want their money back and if the monthly payments are not forthcoming and arrears are mounting, it will send reminders, default notices and threats of legal action.

County Court Judgments are a way for creditors to reclaim debts owed to them by debtors, using the legal system. As applying for a CCJ takes a significant amount of time, creditors tend to exhaust all other recovery options first. If no arrangement can be met though, the creditor may resort to court action to reclaim the outstanding balance.

The claimant will need to prove the steps they have taken to reclaim the debt and prove beyond doubt that the debt is actually owed by the debtor.

There are two types of judgment that may be applied if the claim is successful: a standard County Court Judgment, whereby both sides of the case are assessed, and a default judgment, where the court only hears the side of the claimant. Either way, if the judgment is issued, it will feature on a Credit Report as a County Court Judgment – more on this later.

A CCJ claim form will be issued when a CCJ is lodged against you, which must be completed and returned within 14 days to avoid the default judgment scenario. The exception to this is if you pay the debt in full (plus fees) immediately, which would mean no court hearing is required and no CCJ would be lodged.

Other options are to:

  • Delay payment to an agreed date or pay in instalments
  • Dispute the amount owed
  • Dispute that you owe anything
  • Counterclaim against creditor

All of these will result in a CCJ being lodged against you unless you can prove that the creditor is unjustified in pursuing the debt.

Who can issue a CCJ?

Anyone in the UK has the right to make a CCJ claim, from individuals to private contractors and businesses to local councils and everything in between. Whether or not they decide to make a claim though is a different story.

Firstly, there must be a legitimate debt owed and the court has to agree. Secondly, it can cost a fair bit to make a claim, which can dissuade those chasing smaller debts. If the recovery of the debt isn’t straightforward and the defendant refuses to pay, extra court fees will be required to cover the cost of bailiffs and other court orders, often in excess of £100.

You can never be certain whether a creditor will take court action, but it’s important to remember that if a debt is outstanding, the possibility exists.

How does a CCJ affect my Credit Report?

A CCJ will cause severe harm to your Credit Report. Potential lenders, landlords, and employers (to name just a few) will check your Credit Report during an application to assess whether you’ll be reliable as a borrower, tenant or employee. A CCJ will almost certainly threaten to capsize your application and send warning bells ringing.

If a potential lender sees a CCJ on your Credit Report, it’s likely to assume that – for whatever reason – a creditor had to resort to court action to reclaim owed money. It’s not so much the balance or status of the CCJ that matters, more so that one had to be issued in the first place that damages your Credit Rating.

How long does a CCJ affect me?

If you pay the CCJ in full within the first calendar month of issue, the CCJ will be removed from the Register of Judgments and from your Credit Report. Unfortunately, if a CCJ is successfully lodged and you do not pay within this time, your Credit Report will be impacted for the next six years, making it difficult to obtain credit or, at the very least, restrict the options available to you and the interest rates you’re offered.

How do I check if I have a CCJ?

The easiest way to see whether a potential lender will find a CCJ lodged against you when checking is to view your Credit Report for yourself.

If you haven’t already, you can check your Multi Agency Credit Report free for 30 days, then £14.99 per month. You can quickly and easily cancel online at any time. By checking with us, you’ll have access to the UK’s most detailed Credit Report, including information from all four Credit Reference Agencies, so you can easily compare one Credit Reference Agency another.

Updated 06/12/2019 by Sam Griffin

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