What is a CCJ?

A CCJ, otherwise known as a County Court Judgement, is a court order that can be ordered against you if you fail to make repayments on credit. This type of credit could be a loan, credit card or mortgage.

CCJs are granted when failing to pay loans and other bills, including mortgages, phone bills, lawsuits, compensation claims, payday loans and more.

Whilst most lenders will send you follow ups or reminders if you have not made a repayment, if you do not respond or refuse to pay, the lender can issue a court order to collect the funds.

This means by order of the court that you must pay for the loan or that you have debt outstanding. Having a CCJ is usually a negative thing and is something that will stay on your credit file for 6 years and significantly impact your chances of getting approved for other types of loan and credit in the future.

Key points about CCJs

• Court order for not paying a loan
• Will be on your credit record for 6 years
• Is satisfied if paid, unsatisfied if not
• Usually associated with bad credit
• Is considered serious and not ignored

You will receive a warning letter

Prior to receiving a County Court Judgement, you will be sent a warning letter from the people who you owe money to.

This could be either a default notice or a letter before action is taken. Before any CCJ is ordered against you, you must receive this letter at least two weeks beforehand.

The warning letter will typically outline steps you need to take to resolve the situation before a CCJ is ordered and also outline what will happen if no action is taken by you.

If issued a warning letter, you are usually given two weeks to respond.

What do I do if I get a CCJ?

If you get a CCJ, it should also include a copy of the Financial Conduct Authority (FCA’s) default information sheet, detailing what you need to know.

It is also highly recommended that you obtain free debt advice if you are given a CCJ from the likes of Citizens Advice Bureau or other non-profits. This can be helpful in terms of deciding what your next step will be. It also ensures you are dealing with the claim correctly so that your circumstances are taken into consideration regarding how you repay the debt.

Should I ignore a CCJ?

No, ignoring a CCJ does not make the situation go away. All it means, is that your circumstances will not be taken into account, and the court will still issue the CCJ regardless. As a result, ignoring the situation will only work against you.

Is there a deadline to reply to a CCJ?

Yes. If you receive a CCJ by post, you will have only 14 days in total to reply to it. To reply, you are required to fill in the reply form, providing detailed information regarding your income and outgoings.

What are my options with a CCJ?

When filling in a reply form for a CCJ, your options are as follows:

• To admit the claim if you are in agreement about the amount you owe to creditors
• If you disagree, you can file a defence about the amount owed
• Alternatively, submit an acknowledgment of service, but state that you need more time to defend the claim (more than 14 days). This would be to organise your defence

What can the court do?

The court may decide to:

• Make a judgement requiring you to pay the debt off in instalments
• Make a judgement requiring you to pay the total amount upfront

What happens if I don’t keep to the terms of a CCJ?

If you fail to keep to the terms of a CCJ issued against you, the implications can be serious. At this stage, the creditor will most likely ask the court to enforce the debt. This can be done in a number of ways:

• By taking bailiff action
• Through a charging order
• Through an Attachment of Earnings Order

Will a CCJ affect my credit record?

Yes, unless you pay the CCJ in full within 30 days after receiving the judgement, it will go on file. A CCJ will remain on your credit record for six years and has the potential to damage your credit score.

A bad credit score makes it harder for you to obtain access to credit in the future, or to receive competitive interest rates. However, there are ways you can improve your credit score.

Can you get loans with a CCJ on your credit file?

There are some lenders who are willing to offer what is known as CCJ loans. Most lenders see a CCJ on a credit file as an instant rejection, but some others are willing to take a view.

For instance, because a CCJ can last 6 years, it can become ‘satisfied’ is paid off in full and since 6 years can be a long time, a lot can change for an individual’s circumstances. So even though they have a CCJ, their credit score could be constantly improving and their recent repayment record could be good.

If the borrower has a CCJ and generally has poor credit, there may be lenders who are willing to offer finance on the basis of having a guarantor or valuable security such as a car or property.