What is a CCJ?
A CCJ is a type of court order and could be issued if an individual fails to repay money they’ve borrowed from a creditor, such as a loan.
CCJs are issued in England, Wales, and Northen Ireland, and may also be referred to as a County Court Summons. In Scotland, the process is known as ‘enforcing a debt by diligence.’
What happens before a CCJ is issued?
Under the 1974 Consumer Credit Act, a CCJ issued for credit agreements must come after a warning letter, such as a default notice or a letter before action, sent at least 14 days before the action is taken. The letter should give the borrower the opportunity to repay any money owed and outline the steps that could be taken if the repayment is not made within a certain timeframe.
Once you’ve received a warning letter, you may wish to seek financial advice.
If the warning letter is ignored, a CCJ will be issued.
What happens if you get a CCJ?
Information about your CCJ will be sent to you in the post.
You should be presented with several options to consider, which may include repaying the money in full, requesting to make repayments in instalments, or disputing the claim.
It’s likely that you’ll be given a specific time scale to state your plan of action – usually 14 days.
If you accept the claim, you should fill out an N9A admission form to provide details of your income and expenditure and an offer to repay the debt. The court will then decide whether this offer is acceptable and will determine the rate of your repayments. After this, the court will then issue a judgment specifying the amount you need to pay and the payment schedule or rate at which you must make those payments.
On the other hand, if your repayment offer is rejected, the court will decide how much you’ll be expected to repay, and the rate at which you should repay it. If you cannot afford the repayment amount, you can request a redetermination in the form of a letter to the county court, providing evidence as to why you’re unable to meet the repayments. In the event of a redetermination, the court will re-evaluate your circumstances.
If you are disputing the claim, it may help to have a financial advisor to assist with the process.
Receiving a CCJ can be worrying, but acting fast and responding to the claim form can help address the situation more effectively.
If the CCJ is ignored, the court could take further action, such as involving bailiffs or arranging an attachment of earnings.
What if I do not agree with the CCJ?
If you do not believe that you owe the money, and have a genuine and legal reason for this, you can dispute the CCJ and ask the court to re-open the case. You might have to pay a fee for this.
If the court agrees that you do not owe the money, the CCJ will be removed or ‘set aside.’
CCJs that have been successfully disputed and removed will not be recorded on the Registry of Judgements, Orders and Fines or your credit file.
Will a CCJ show up on my credit file?
Unless you repay the amount you owe within 30 days of the date of issue or have your claim ‘set aside’, a CCJ will remain visible on your credit file for six years, and will also be added to the Registry of Judgements, Orders and Fines database.
After six years, the CCJ will be removed from both the register and your file, even if the money has not been repaid in full.
How might a CCJ affect my credit score?
CCJs can significantly lower your credit score. When a CCJ is added to your credit file, your credit score could drop by up to 250 points. This is in addition to any points you’ve already lost as a result of defaulting on repayments.
Your credit score could start to improve once the CCJ has been removed from your file.
Will having a CCJ on my credit file prevent me from being able to apply for credit?
If you have an active CCJ, your options for borrowing credit are likely to be limited.
When you apply to borrow credit, providers and lenders will take an in-depth look at your financial history.
Some private landlords or letting agencies may also look at your credit history as part of their application process. Having a CCJ on your file could stand in your way of approval, as creditors could view you as a risk.
According to Your Debt Expert, the older your CCJ, the less of a negative impact it will have on your eligibility, although until it’s removed from your file completely, you are likely to encounter problems when applying for credit.
You should think carefully before applying for credit with a CCJ on your file. If your application is approved, you must be sure that you can afford to make your repayments alongside your other necessary outgoings, such as bills and groceries. The last thing you want is to fall behind on repayments and risk harming your credit score further.
Can you get more than one CCJ?
Yes, you can have more than one CCJ at the same time, although you cannot get multiple CCJs for the same debt.
What happens if you do not stick to the terms of the CCJ?
If you experience difficulties when repaying the money you owe and breach the terms of your CCJ agreement, it’s possible that the creditor will request further action from the court. This could include an Attachment of Earnings Order, which is when the money is taken directly from your wages, or a Changing Order, which could result in the debt being secured against your property. If you fail to make your repayments with a Changing Order in place, your property is at risk of being seized by the creditor.
The creditor can also ask the court for a Warrant of Execution. This is when the court sends bailiffs to your home to collect either the money owed or any assets of value that could be sold to cover the cost of the debt. You should be aware that you are within your right to appeal against a Warrant of Execution and can ask the court to allow you to repay the money at a rate that’s affordable to you.
How to rebuild your credit score after a CCJ
While CCJs will have a negative impact on your credit score, there are things you can do to take steps towards a healthier credit position and rebuild your score.
- Check your credit report for errors. Feedback any inaccuracies, such as a misspelled name or incorrect address, to the credit reference agencies.
- Register to vote. Being on the electoral roll will make it easier for potential lenders to verify you at your current address.
- Pay all your bills on time.
- If you have an active credit card, be sure to make more than the minimum payment amount on time each month and stay well within your credit limit. You should also avoid using your credit card to withdraw money from cash machines.
- Limit the number of applications you make for credit. Each time you apply for credit directly with a lender or provider, a hard search will be carried out. A hard search will remain on your credit file for up to 12 months and multiple hard searches within a short period of time can cause your credit score to decline.
How can I avoid a CCJ?
Whether it’s your phone bill, loan, or credit card, be sure to make your repayments on time each month.
Missing or falling behind on your repayments can lead to serious consequences, such as late fees, additional charges, a decline to your credit score, and even the issuing of a CCJ.
If you do find that your financial situation has changed and you can no longer afford to make your repayments, you should contact your creditor as soon as you can. While it can be tempting to ignore the problem and hope it will go away, reaching out, asking for help, and being honest about your circumstances is the first step towards taking back control. Your creditor will appreciate the fact that you’ve got in touch and will want to work with you to put a suitable plan in place moving forward.
Worried about money?
Sometimes, life doesn’t go according to plan.
We can be as careful as we like with money, but when big events occur outside of our control, we may find that our financial situation changes.
Money worries can feel extremely consuming and isolating, but you should never feel ashamed of your situation. No matter what you’re going through, please remember that help is available.
You can access free, confidential advice and debt help through various charities and organisations, such as StepChange, MoneyHelper, Citizens Advice, and National Debtline.