You may get a County Court Judgment (CCJ) registered against you if you fail to repay money you owe. If you've received a warning letter from a creditor, or need to reply to a Claim form, here's what you need to know.
If a court has formally decided that you owe money to a creditor, you will receive a judgment in the post. It will tell you exactly how much you owe, how to pay (in full or in instalments), how long you have to pay and who to pay.
Unless you pay the full amount within a month of receiving the judgment, it will remain on your credit record at the Register of Judgments, Orders and Fines for six years, which can make it hard to get credit in the future. People with outstanding CCJs can find it hard to get a mortgage, a credit card or even a bank account.
The initial claim
Before you get the summons, you should have been sent a warning letter by the creditor, informing you that unless you repay what you owe, they will start legal action within a certain timeframe. Depending on the type of debt, this warning will be a 'default notice' or a 'letter before action'.
For credit agreements regulated under the Consumer Credit Act, you must be sent a default notice a minimum of 14 days before any action is taken. It should tell you how you can remedy the default and what action may be taken if you don't. It must also include a copy of the Financial Conduct Authority's default information sheet.
Seek advice immediately if you receive one of these letters or notices. There are lots of charities and debt advice services that will help you negotiate with your creditor(s) for free.
Replying to a Claim Form
You have just 14 days to reply to a Claim Form. The income and outgoings information you provide on the 'Income and Expenditure' reply form will give the Court an idea of how much money you might have available to settle the debt.
You can either make an offer of payment – in which case you should only offer to pay what you can realistically afford – or file a defence if you disagree with the amount owed. If you wish to do this, take advice from a free debt agency first. Try the Money Advice Service for more information and a list of free debt advice charities.
Making an offer of payment
If you suggest an amount which the Court accepts, you will receive a County Court Judgment (CCJ) giving you details of when and how to make payments. If the Court does not accept your offer you will be issued with a CCJ to pay an amount decided by the Court. You can request that the Court looks at this again (a redetermination) if the repayments are more than you can reasonably afford.
You should pay the person or business you owe the money to, or their solicitor. The name and address will be on the judgment form. Don't pay the court. Ensure you obtain proof of payment – send a cheque or postal or make a bank transfer. Never send cash through the post.
If you don't owe the money
If you don't owe the money, you can ask the court to cancel the county court judgment (CCJ) or high court judgment. This is known as getting the judgment 'set aside'. You can do this if you didn't receive, or didn't respond to, the original claim from the court saying you owed the money.
To get a judgment set aside, you will need to fill in the application notice (N244), and send it to the court. You may have to pay a court fee of £155 and will have to attend a private hearing at the court to explain why you don't owe the money. If you don't turn up to the hearing, your application will be rejected and you'll have to pay the amount in the judgment.
If you don't keep to the terms of a County Court Judgement
The creditor can ask the Court to issue a Warrant of Execution if you don't stick to the terms set out in the CCJ agreement. This allows a county court bailiff to visit your home or business to collect the money you owe – or to ascertain whether you have goods to the value of the money you owe.
You'll be given seven days to pay before they visit. You may be able to stop the bailiff from visiting by filling in the N245 application form and saying how you'll repay the money - eg weekly or monthly payments. If your offer is accepted, the warrant will be stopped as long as you keep up with the payments.
If you own a property (either with a mortgage or outright) the creditor can ask for a Charging Order to be secured on it. The Court may also issue an Attachment of Earnings Order, which asks for the money owed to be deducted by your employer from your wages.
Search the register of judgments
You can look up details of any judgments against you on the register of judgments. You'll have to pay a fee - a standard search costs £4. If the information on the register is wrong, contact Trust Online (Tel 020 7380 0133), who will check the details with the court.
Note: County Court Judgements are enforced in England, Wales and Northern Ireland – in Scotland the process is called enforcing a debt by diligence.
Do you have CCJs against your name? What advice would you give others? Leave a comment below...