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What is a CCJ?
The acronym stands for County Court Judgement. This is a formal judgement issued by the courts if you fail to keep up with the credit agreements contractual payments. Then based on the debtors circumstances an affordable repayment is calculated by the court. However before a creditor can apply to the courts for a CCJ a notice of default must be issued.
What debts can cause a CCJ?
All types of unsecured credit can lead to a CCJ if you have failed to have kept up your contractual payment or any agreed arrangement. Any individual or a firm may also take you to court if you owe money to them. Making small token payments on your agreements will not necessarily prevent court action.
What is the process of receiving a CCJ?
The creditor (also known as the Claimant) must apply via the courts with the relevant claim form detailing the relevant debt. This must then be stamped by the court and only then is a response pack sent out, which contains the following and must be returned within 14 days:
- Defence Form – For any disagreements regarding with debt complete this form.
- Admission Form – Completing this form means you admit that you owe the amount to be claimed.
- Acknowledgment of Service – This form is to be completed if you require further time; this will then extend the time from 14 days to 28 days.
You MUST return the necessary paperwork. Ignoring any court summons will result in, the order being made against you, even if you don't owe the money!
If you do not disagree regarding the amount owing, you will be required by the court to complete an income and expenditure so a realistic and affordable payment can be set. You will then be required to make the new monthly repayment until the CCJ is fully paid off.
Who do I need to make the CCJ payments to?
The creditor will inform you as to whom the payments need to be made to. This may be the solicitors acting on behalf of the creditor or the collection agency alternatively it may be to the creditor directly.
What if I cannot afford to make the CCJ payments?
You can apply to reduce the monthly repayment set by the court by completing an ‘Application to Vary an Order- N245 form. This is obtainable from any County Court or online and there is an associated fee with this form of £35 unless the application is made within 14 days of the recovery judgement. The CCJ may be reduced in relation to your change of circumstances via a new financial statement regarding your income and expenditure.
If you cannot afford to pay anything towards the CCJ you can apply to have the judgement set-aside by completing an 'Application Notice' form N244. This will reflect your new circumstances via a new income and expenditure and will be sent to your local court with the fee of £60 or £70. A new hearing will then take place giving you the opportunity to discuss your situation; a representative of the creditor may also be present.
What happens if I don't pay the CCJ?
If you fail to make payments on a CCJ order possible outcomes include the issuing of Bailiffs, a "charge" being placed on your property (Charging Order) or the court can order your employer to deduct the amount direct from your wages (Attachment of Earnings Order).
What if I disagree with the amount owing to the creditor?
If you disagree with the amount owing to the creditor you will need to complete a ‘Defence’ form (which is included in the response pack sent to you form the court) fully explaining your reasons for your disagreement. A new hearing date will then be set by your local court which you must attend and it will be resolved then.
What will happen to my home?
If you have a mortgaged property or own a property outright and you pay the agreed amounts to the CCJ, your property will be safe - but if you fail to make the repayments the court can issue a Charging Order. This process turns an unsecured debt (such as a credit card or store card) into a secured debt (like a mortgage) and if you then fail to maintain the repayments, the court can force the sale of the property to pay back the creditor (see House Repossession).
How do I find out if I have an existing CCJ?
All CCJs are shown on your credit file. You can request for your credit file from one of the main credit reference agencies such as Experian or Equifax.
Will a CCJ affect my credit rating?
A CCJ will stay on your credit file for 6 years unless it takes you longer to repay the CCJ (in which case the creditor will re-register the CCJ with the credit reference agency). However the CCJ will not be show non your credit file if it is paid in full within 30 days. If not paid within 30 days then all lenders can see that you have failed to maintain your monthly payments on your existing credit so will be less likely to lend to you.
You may have an entry marked as ‘satisfied’ if you pay your CCJ off in full within the 6 years this can be done by writing to one of the credit reference agencies and enclosing a ‘letter of satisfaction’ from the issuing County Court. This is especially useful if you are applying for a mortgage.
Is my home at risk?
Your property is safe as long as you keep to the monthly repayments agreed by the CCJ. However if you fail to keep up with the repayments the Court can issue a Charging Order- this will essentially make the unsecured debt (such as a catalogue or store card) to a secured debt against your home. If you then continue not to pay the court can force a sale of the property to pay the outstanding amount (House Repossession).
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