If you borrow money and don’t pay it back, the lender who you borrowed from could take further action. One way they can do this is by registering a County Court Judgement (CCJ) against you.

Getting a letter from the court about this shouldn’t come out of the blue. The lender would have tried to get in touch with you before they involve the courts. They would have wanted to come to some arrangement with you rather than taking a legal action.

What is a CCJ?

A CCJ is a County Court Judgement that’s registered against you when you have a debt that you haven’t been paying back. The debt could be any type of loan such as short term loan, bad Credit loan or an unsecured loan.

The process a company would go through to register a CCJ against you is as follows:

• The lender would tell the court that you owe them money but that you aren’t paying it back. You’d be sent a CCJ claim form which you have 14 days to complete. The form will ask for details of all your income and outgoings. This is so that the court can see how much money you have available to pay back the debt.
• If you disagree with the claim that’s being made or with the amount the loan company is claiming, you can defend this. This is called filing a defence.
• If you don’t respond to the claim form within 14 days, the court will still issue the judgement. However, without your information, they won’t be able to take your circumstances into account.
• Once the court has looked at all the paperwork, they’ll issue a decision. If your defence is unsuccessful then the County Court may issue a judgement. The judgement will ask you to pay back what’s owed either in instalments, or in one whole payment.
• If you can’t afford the repayments set by the CCJ, you can ask the court to look at their decision again. This is called a redetermination.
• Once the CCJ has been issued, it’ll be added to the Register of Judgements Orders and Fines. It will also be reported on your credit file.

If you fail to meet the terms of the CCJ, things could escalate further. If you do find yourself with a CCJ registered against you, let’s look at how it’ll Affect you.

How Would a CCJ Impact Your Credit Score?

A CCJ will be recorded on your credit file and will remain there for 6 years. Banks and loan companies use a credit report to decide whether to lend to you. With a CCJ on your file, you’re more likely to have a bad credit score and may struggle to access credit in the future.

Also, do check our guide on what affects your credit score to get a full view on all the factors which might affect your credit score and rating.

It’s always best to avoid getting a CCJ registered against you if you can. The best way is by talking to the company you owe money to as soon as any troubles start. By coming to an arrangement with them, you can stop them from taking this sort of action.

If you’re in any financial difficulty, ask for help. It’s always better to try and work out a solution than to do nothing and hope it’ll go away. Your lender will want to help you out and set-up an affordable repayment plan. There are also charities that can give you advice for free. Do this and you’re less likely to end up with a CCJ registered against you. You can find out more about money advice here.

Disclaimer: This blog is for information only and is not intended as legal or financial advice.