A CCJ can have a significant impact on your credit score. If you have unpaid debts, it’s possible that you’ll be legally required to settle them.
Our guide to CCJs explains what happens if you receive one, and what you can do to solve the problem.
What is a CCJ?
CCJ means County Court Judgement. A CCJ is a court order that is issued if you haven’t kept up repayments to a creditor. It means they’ve gone to court to request you repay the money, but this is something of a last resort if they haven’t heard from you about settling the debt.
If you receive a County Claim Form, it is a serious matter and should definitely not be ignored. You have a limited timeframe in which to respond – normally just over two weeks – before you’re issued with a CCJ.
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.
You can check your credit report easily online for free with a credit reference agency like Experian or Equifax.
Having a CCJ on your credit report 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.
What to do if you get a CCJ claim form
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 correctly.
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:
1. 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.
2. Ask to have the terms changed if you are unable to afford them
If you think you’ll 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 court form N245 and sending it to the creditor.
3. 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 cancelled using the ‘set aside judgment’ 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 the 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 could 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 paying 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.
If you pay off the full amount owed within one month of a CCJ being issued, you can apply to have it removed completely. If you pay it off within the six-year window, you can apply for a ‘satisfied’ mark against the CCJ.
Can you get a mortgage with a CCJ?
Yes, it is possible to get a mortgage agreement if you have a CCJ. Your chances of success vary depending on:
- How long ago the CCJ was issued
- Whether or not the CCJ is ‘satisfied’ and for how long
- The amount you owed when issued with a CCJ – this could affect the loan-to-value ratio of your mortgage and present higher risk to lenders
- If you have one or more CCJs.
You could talk to an independent debt adviser for help with any issues regarding your CCJs if you’re applying for a mortgage.
Applying for a loan with a CCJ
Having a CCJ on your credit file may impact your ability to get credit, as lenders may not be confident you can make repayments. Depending on the lender and how much you want to borrow, it may still be possible, though you may face unfavourable terms such as higher rates.
Even if you have a CCJ, there are various ways you can improve your credit rating. Read our blog to find out more.
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