If you receive a CCJ, it is a serious matter and should definitely not be ignored, as you have a limited timeframe in which to respond – normally just over two weeks.
A CCJ is a County Court Judgement. This is a court order that is issued if you have failed to repay a debt owed. A CCJ can have a long-term impact on your credit record and affect your chances of getting credit or a loan for many years to come. It’s important you address it in the right way, by responding promptly.
How do I know if I have a CCJ?
You can check if you have any CCJs on your credit report. Lenders have full visibility of your credit report too, as it helps them to decide whether they’ll lend to you. If you have any CCJs against your name, you may find future applications for credit are declined, as the lender will not be confident of your ability to repay the debt.
You can check your credit report easily online for free with a credit reference agency such as Experian or Equifax. A bad credit rating can hamper your chances of getting credit such as a loan or mortgage, as well as products like insurance or a mobile phone contract. Don’t despair though, there are some things you can do to improve your credit score, such as demonstrating you can pay on time for things like credit cards, bills and monthly rent.
If you’ve received a CCJ, it’s unlikely to have come as a total shock. You should have received at least one letter from your creditor beforehand, warning that legal action would be taken if you don’t repay your debt. There is a step-by-step process involved in responding to a CCJ, and it’s important to do it in the correct way.
A CCJ will include details about the amount you owe, what it’s for and an outline of the three options you have in terms of how you should respond:
- Pay the debt as per the terms stated in the CCJ
This will normally be in monthly instalments paid directly to the creditor rather than to the court.
- Ask to have the terms changed if you are unable to afford them
If you think you would struggle to pay the monthly repayment amount, you can apply to have the terms changed. This will only be successful if you can demonstrate on the application form the reasons why you will not be able to afford the monthly amount. It can be done by completing form N245 and sending it to the creditor.
- Apply to have the CCJ cancelled
If you believe the CCJ has been issued in error, or you’ve already paid off your debt, you can apply to have it ‘set aside’ or cancelled using form N244. The court needs to agree with you that there is good reason for the CCJ to be set aside.
What happens if I ignore a CCJ?
You shouldn’t ignore a CCJ, as if you don’t respond to it in one of the above ways within the period specified, you may be subject to further legal action. This may include asking you to repay the debt in full immediately (called ‘forthwith’ in the court order) or at a monthly rate higher than you can afford. If you receive a CCJ but are unsure about what to do, it’s important to seek advice as soon as possible, perhaps from a debt charity such as Step Change.
Failing to agree repayment terms with the creditor will result in the court deciding an amount you are liable to pay. Bear in mind that the letter of claim you receive is your chance to have a say on your situation. If you ignore the letter of claim, the CCJ will still be made against you.
Send back the reply form to the creditor in good faith and there is a chance you may be able to discuss a repayment plan without getting the court involved, which is better for everyone involved in the long run.
How long does a CCJ last?
A CCJ remains on your credit file for six years. While it’s on record, it can make obtaining financial services such as loans and mortgages very difficult, as many banks will refuse credit to people with outstanding CCJs or a poor credit history.
Even if you have a CCJ, there are various ways you can improve your credit rating. Read our blog to find out more.