County Court Judgement
What is a CCJ and how do you deal with one?
You may be familiar with the term CCJ, but do you know what it means and how they can affect you?
In this short guide, we’re going to look at when you could be issued with a CCJ, what it means for your legal rights and what to do if you receive one.
What is a CCJ?
CCJ stands for County Court Judgment and is a type of court order in England, Wales and Northern Ireland that can be registered against you if you fail to pay back money you owe.
In Scotland, the process is called enforcing debt by diligence.
What is the CCJ process?
If you have failed to establish an agreement with people you owe money to (your creditors), you could be issued with a County Court Claim by the Court.
For credit agreements regulated under the Consumer Credit Act, you must be sent a default notice, at least 14 days before any action is taken.
How do I respond to a CCJ?
If you receive notice of a CCJ you should seek advice immediately to ensure you deal with the claim correctly and the court can take your circumstances into account when making a decision on how you should repay the debt owed.
It’s extremely important to remember ignoring a CCJ will not make it go away. If you ignore the letter, the court will still issue the judgement, however, they won’t be able to take your circumstances into account when making their decision.
For instance, they could order you to pay back the sum owed in full when it is impossible for you to do so.
Is there a deadline for replying to a Claim Form?
The simple answer is yes. You have 14 days to respond after you’ve received a Claim Form.
You are required to fill in the reply which includes an Income and Expenditure form – detailing all your income and outgoings. This will show the Court how much money you have available to pay off the debt.
- Admitting the claim – If you agree you owe the money your creditors are seeking to claim. You will also be required to fill in a form giving the Court details of your financial circumstances and you will be asked to make an offer of payment.
- Filing a defense – If you disagree with the amount you owe contact us or a free advice service like The Money Advice Service.
- Submitting an acknowledgement of service – If you intend to defend the claim but need longer than the initial 14 day period to prepare your defense.
What happens after I receive judgement?
After the court has passed judgement they can issue:
- A judgement by installments, where you pay your debt off over time, or
- A judgement forthwith, where the whole amount you owe is due immediately.
If you accept the claim and make an offer of a monthly payment, the likelihood is you’ll receive a judgement by installments.
The monthly rate of payment will be set by the court, considering the information you provided in your admission form.
If you fail to provide the necessary details the Court is unable to take your circumstances into account and will still enter a judgement against you.
What happens if I don’t keep to the terms of a CCJ?
If you receive a CCJ and fail to keep to the terms it sets out, your creditor can ask the court to enforce your debt.
There are several ways in which they can do this:
Warrant of execution
This is when a bailiff is instructed to visit your home to remove goods to sell at auction to total the debt plus any costs incurred.
Attachment of earnings
An Attachment of Earnings Order asks for the money owed to be deducted by your employer directly out of your wages.
The creditor can apply to the land registry to apply the debt to your property which means when you sell the property they will be informed and the debt then has to be paid at that point in the same way your mortgage would be paid at that point.
Will a CCJ affect my credit record?
Yes, it will, unless you pay it off in full within 30 days of receiving the judgement.
It will appear on your credit record at the register of Judgements, Orders and Fines and will remain there for six years.
Your chances of obtaining a mortgage, credit card, bank account or even employment could be seriously affected in the future.
How to avoid receiving a CCJ
If you’re finding difficulty keeping up with your payments, speak to a debt adviser as soon as possible. They can help you to negotiate with your creditors and explain all the options available to you.
Will an IVA remove a CCJ from my credit file?
If a CCJ has already been issued the debt associated with it can still be included within an IVA. This is because the Arrangement is legally binding. Once your IVA has been agreed by your creditors it is then supersedes the Judgment.
You are then no longer required to keep to the payment terms you agreed as the debt is paid within the IVA in the same way as any other debts that have been included.
If you have been paying towards the CCJ you can cancel this payment once your agreement is in place.
After your IVA has been approved:
- The IVA will be shown in the Public Record section of your credit record. It may take a few weeks to appear, but when it does the date will be the date that your IVA started
- Any debts that are included in your IVA which have not been marked as defaulted, should have the date your IVA began added
- Any debts already marked as defaulted or for CCJs will remain the same
- Debts such as your mortgage will remain the same as they do not form part of your IVA
Are IVA’s a good solution for the self-employed?
Research suggests that self-employed people are as likely to be struggling with debt as much as the unemployed.
The debt is more likely to be unmanageable compared to those who are employed and unemployed, and self-employed people owe almost 40% more than those in employment.
Scary stuff, and an extremely stressful situation if you have found yourself treading water when it comes to paying your bills as a business owner.
As a self-employed person, you not only have the worry of paying bills to keep your business afloat, but also personal bills and commitments at home.
However, it is imperative to deal with any financial difficulties you may be facing as quickly as possible to protect your business and your livelihood.
By acting through a debt solution, you’re able to prove to your creditors that you are taking the matter seriously. It could help to stop any legal action against you, which could affect your assets, as well as freezing interest and charges that are added to the original debt.
Where can I get the right advice?
It can be very difficult for a self-employed person to work out what they can afford to pay towards their debts each month, as well as accounting for enough to keep the business afloat.
If you haven’t kept your personal and business expenditure separate it can be difficult to know just how profitable the business is.
Filing for bankruptcy is not always the best option when you have spent years of effort, blood, sweat and tears to get your business off the ground and established. Any business assets could be sold and any employees you may have would be laid off. It also prevents you from being the director of a company as you would not be able to continue in that capacity if you do declare yourself bankrupt.
Similarly, entering a debt management plan may also not be the most appropriate route, as the tax authorities and trade debts will often require that you pay in full within one or two years. Your creditors are also still able to go ahead with legal action against you whilst in a DMP.
How an IVA can benefit the self-employed?
If you are struggling to pay your debts the other option you may want to consider is an Individual Voluntary Arrangement (IVA), which are designed to work for the self-employed.
IVA’s were devised as an alternative to bankruptcy, making it easier for you to continue to trade, retain your assets and protect the jobs of your employees.
When you enter into an IVA, you make one monthly, affordable payment to an Insolvency Practitioner who distributes the payments to your creditors. If you stick to the terms of an IVA and complete the process, anything left over is written off, leaving you debt free.
An IVA usually lasts for between five and six years.
How much will I have to pay back?
An Insolvency Practitioner will help you put together a business cash-flow for the following twelve months which projects the future income and expenditure of the business.
This also shows your creditors that the business is profitable and you can keep up with reduced monthly payments towards your debt, whilst giving you a clear indication of if you will be able to manage your essential business costs.
Any monthly income, after tax, generated by the business will be used towards your personal living costs, with anything left over going towards you IVA to pay back your debt.
Business income can fluctuate seasonally and an IVA allows for that if you cannot commit to a set monthly amount. For instance, if you are a roofer and most of your work tends to come in the warmer months, your IVA can be flexible allowing you to make payments towards your IVA as your income is received, providing you pay in an agreed amount annually.
How can I be sure an IVA is right for me?
You need a trained debt adviser to evaluate your business and personal finances to establish whether an IVA will be an appropriate solution for your circumstance
What is a Self-Employed IVA?
If you’re Self-Employed and struggling with your finances, a Self-Employed IVA could be the right option for you.
A Self-Employed IVA is a debt solution which has been tailored to suit the needs of a self-employed worker.
Am I able to keep trading in a Self-Employed IVA?
You can keep trading, if the business you are running is profitable.
A Self-Employed IVA is designed to allow you to continue paying back your debts whilst allowing you to keep running your business at the same time.
What if I owe money to some of my suppliers?
When discussing all your options a debt adviser will draw up a business cash-flow and personal income and expenditure to build a clear picture of your finances and what you can afford to pay back to your creditors each month.
Your income and expenditure will consider your current financial commitments with your suppliers and will be added to your business cash-flow to make sure you won’t miss any further payments.
How long does a Self-Employed IVA last?
Your IVA would usually last five years, however it could be extended for a further year if you have equity in your house that you are unable to release.
This is agreed at the start of your IVA so you know exactly what you’re dealing with and is dependent on individual circumstances.
Will a Self-Employed IVA affect my business?
Providing you’re can afford to keep your business trading an IVA shouldn’t have any effect on your business.
What debts can I include in a Self-Employed IVA?
You can include most unsecured debts in a Self-Employed IVA, such as:
- Overdrafts, bank loans and credit cards.
- Council tax arrears.
- Store Cards.
- Payday loans.
- Rent arrears.
- Utility arrears.
- High Court Enforcement Debts
Debts that cannot usually be included into an IVA include:
- Hire purchase agreements.
- Student loans.
- Secured loans.
- Court fines e.g. speeding tickets, parking fines.
- Child maintenance arrears.
Will I still have to pay tax whilst in a Self-Employed IVA?
You would still be required to continue paying tax throughout your IVA, however, any arrears or any tax you owe up to the end of the year when your IVA was agreed can be included in your IVA.