Countries survive on it. So do organisations. Debt is a part of practically everyone’s life and, as individuals, we are all, to a greater or lesser extent, debtors. It’s very unusual for someone to enjoy all the trappings of modern life, including cars, homes and other necessities, without borrowing money at some point to finance these things.
Of course, where there are debtors, there are creditors – those lenders or providers who expect to be repaid within the terms and conditions of the contractual relationship established with the debtor. When a country can’t pay, its international rating is lowered to indicate the higher risk of lending to it. When a company can’t pay, it may need to call in official administrators and close down, with creditors often left empty-handed or poorer off.
When it comes to individuals, the impact of not being able to pay off a debt is obviously much more personal. The effects can trickle down into many areas of your life and even impact your ability to get hired or apply for more credit. It can even affect your ability to apply for financial products like home insurance, as some insurers won’t give you a quote if you have an adverse credit history (meaning you’ll need to apply for non-standard home insurance
). There are also legal ramifications. In order to recoup, a debt creditor can use the UK legal system to deliver a County Court Judgement (also commonly known as a CCJ).
Excluding mortgages, the average household debt on unsecured loans went up significantly in 2018 to an all-time high of £15,385, up £886 in a year, according to research
done by the Trades Union Congress (TUC). So it isn’t surprising that most recent statistics on CCJs indicate that there has been a record number
of them within the first three months of 2019.
What is a CCJ?
It’s a judgement on the requirement to pay back largely non-secured debts. And it’s often resorted to by low-priority creditors, who go to the county court to find a way of chasing down unpaid and bad debts. The most frequently cited non-priority debts include the following:
- Unpaid credit card bills/balances
- Unpaid balances on store cards
- Generic unsecured loans
- Non-payment of catalogue or high-street hire-purchase bills
- Non/Late payment of payday loans
- Non/Late payment of doorstep-collected loans (among these, the infamous ‘loan shark’)
If you receive a County Court claim form, the most urgent step is to take advice from a free debt advice service. Do this as soon as you can.
The claim form won’t just come out of the blue. The creditor in question will have sent you either a warning letter or a default notice. This will inform you that you should repay the balance of whatever you owe on your loan or unpaid bill. The correspondence should tell you how you can respond and will include a warning of legal action if you fail to comply.
Note that where credit agreements regulated under the Consumer Credit Act are concerned, the creditor (or agency acting on their behalf) is obliged to send you a default notice. It should be sent at least 14 days before any action is taken. The CCJ notification letter must also include a copy of the Financial Conduct Authority’s information sheet
As we mentioned, it’s crucial to get some kind of advice before acting (or not acting) without being fully informed about your options. This will let you deal with the claim appropriately and legally. That way, should the claim reach court, you’ll have the necessary information to take your circumstances into account when they decide how you are to repay your debt.
It’s a risky and unwise tactic to bury your head in the sand and ignore the letter or notice. If you do so, the court will make a judgment but without having been able to take your circumstances into account. In the worst of all cases, the court may order you to repay the entire amount at once, although it may be impossible for you to do that.
If a county court takes action against you, you receive court forms, to which you should respond immediately stating the amount you can afford to pay per month. You only have 14 days to reply. The court assesses your financial circumstances (income and expenditure section) before deciding how you should pay back.
When you receive a CCJ ‘judgment for claimant’ notice, you have three options
- Pay as ordered by the court.
- Submit an application to alter the payment terms.
- Apply to get the CCJ cancelled or ‘set aside’ if it doesn’t apply to you.
How can I set aside a County Court Judgement?
You can only set aside a court judgment if there is good reason. You are obliged to pay a fee and if you apply without a good enough reason you don’t get a refund!
There is a chance you can get a CCJ set aside if the original judgment didn’t consider your response. This could happen if:
- The form went to an old address
- Problems with the post prevented you from receiving the form.
Apart from this, there are other arguments against the amount the creditor claimed, which you will need to substantiate. For instance:
- You replied to the claim form on time, but the creditor ignored this or was too hasty in requesting a judgement from the court.
- The amount claimed has been incorrectly calculated.
- You had already paid in full before the judgment took place.
- The debt was statute-barred before the creditor issued the claim. In other words, too much time has elapsed before taking court action. This means more than six years have passed since you had contact with the creditors in question.
This may occur if you’ve moved house and creditors haven’t been informed of your change of address. Therefore, it can be a bit of a shock to find a CCJ you knew nothing about on your doormat. In fact, many only discover the fact when they get turned down when applying for new credit or (and this doesn’t often happen) cases when a bailiff comes knocking at the door. If this happens to you, you could set the CCJ aside, but this is only worth it if you dispute the amount the creditor is demanding. If the judgement is correct, but you’re unable to pay it, ‘varying’ a judgment is your best alternative. This means asking the court to set affordable monthly payments.
So, if you are served with an unknown CCJ, firstly, check by whom it was issued by consulting the court forms you receive by post. If there are no forms, call the court to discover who the creditor is. Once you are fully informed you can then verify if the amount is correct and make a decision on your best option - varying or setting aside
How long does a County Court Judgement last?
A CCJ stays on your credit profile for six years, even if it’s paid off during this period. If and when you apply for any kind of credit, your profile information is accessed by lenders. Having a CCJ can significantly reduce your chances of getting a loan, a credit card or even something as basic as a bank account. Employers and letting agents also have access to your credit information. They can see your CCJ before hiring you or letting property.
Can a CCJ affect your insurance?
County Court Judgements are indicated as either satisfied
on the Court Register. ‘Satisfied’ signifies that the judgment has been paid off in full, while ‘unsatisfied’ means the debt (or part of it) has not yet been repaid satisfactorily.
If you are a debtor (legally, ‘The Defendant’) and are unclear about your case, you can make this known to the court by contacting them, quoting your case number. The Court Register does not contain details of the claimant (the creditor who has taken this action against you), although you can get this information from the county court where the case is presented.
The information that comprises the Register is:
- Your name and address (as the defendant)
- Details of the court and case number
- The amount owed and date of registration
- If applicable, the satisfaction details (once the court notifies the Court Registry Trust)
If you’ve received a CCJ, this could have some complicated and unpleasant ramifications
for you if it’s not removed from your credit record. It can affect your credit score and, hence, make it difficult to get credit. It may even stop potential employers from offering you a job. It may also have serious implications for your insurance coverage, particularly home insurance, where you are required to apply for non-standard home insurance rather than standard cover.
How can you remove a CCJ?
There are three ways of getting the CCJ removed
, or prevent it from being registered by the court in the first place.
1. Pay the CCJ within a month
A CCJ can be registered on your credit record within two days of the court’s judgment. However, if the court knows that you have repaid the entire amount within a month, then it will be removed from your record. Therefore, provided you pay it within that time limit, to all intents and purposes it will be as if the debt had never been entered.
Your creditor is responsible for informing the court that you’ve paid off the debt in full. If they don’t do that, the court won’t know and the CCJ will remain on the register. You should pay the business or person you owe money to or their legal representative.
Do NOT attempt to pay at the court, and make sure you obtain proof of your payment – the wisest option is to do it by bank transfer. It’s also a very good idea to ask them to confirm that they actually have informed the court of your payment because although you have the right to tell the court yourself, you’ll need to send proof of payment and they will charge you £15 for your troubles!
You may need to (or choose to) take more than a month before paying the debt. Although this means the CCJ stays on your credit record, it’s marked as ‘satisfied’. This makes it easier for you to get credit than if it’s ‘non-satisfied’ (marginally easier, we should point out). Any credit checks carried out by potential lenders or credit providers will indicate that you’ve paid up even though you weren’t strictly ‘on time’.
2. Wait for six years to pass
Once the six-year period has expired, the County Court Judgement is automatically removed from your credit record without you needing to take any action. This is regardless of whether you have paid or not, as the CCJ is removed after six years and any creditor is no longer within the eligible period to enforce it. These six years are counted from the date of the judgment.
It may be the case that a lengthy period of time has passed since your CCJ was entered. In this case, simply waiting for it to expire after six years might well be your best option. However, if the CCJ is only recent, you need to ask yourself if you really want to lumber yourself with a bad credit rating for a lot more time, with consequent limitations on your ability to borrow money.
3. Submit an application to get a CCJ set aside
A court can use its discretion to set aside a CCJ, based largely on whether you made the application promptly. Thus, you really need to act on the CCJ as soon as you know that it has been registered against you. That is going to give you the best chance of the CCJ being set aside.
The court also has powers to set aside a judgment at the hearing itself if you fail to attend, but you will need to have a good reason for not having attended.
What to avoid doing
Beware of fly-by-night businesses claiming they can ‘repair’ your credit report. They often imply that, by clever legal manoeuvring, they can remove a CCJ held against you. The OFT (Office of Fair Trading) has issued warnings that companies like these are frequently delivering false or misleading information which involves charging extras for the service they supposedly provide. Of course, these bogus claims apply to many dubious companies offering products in financial services (often online or through cold-calling based on publicly available court records) – there is no miracle short cut in the case of CCJs.
In fact, the OFT warns that these operators often encourage clients to give false statements, which could lead to further prosecution. Involvement with such outfits could cause you long-term money problems, potentially dragging you into further debt.
Can you remove a satisfied CCJ?
You can remove a satisfied CCJ if you pay the amount owed in full, within a month of the date of the judgement. Once you’ve paid, the CCJ and all its details will be completely expunged from the court register. If you pay the CCJ but take longer than a month to do so, you receive a certificate of satisfaction, but the judgement still stays on the register. As with all the information above, the best thing to do is to fully inform yourself
as to your options.
Applying for non-standard home insurance
Having a CCJ hanging over you is unpleasant enough in itself, but it can also affect the security and protection of your home, which can cause even greater stress. We are specialists in providing non-standard home insurance, so get in touch with us
and we’ll arrange the best insurance for your home.