If a creditor has issued a County Court Judgement (CCJ) demanding you repay money you owe, you should pay it back within the allocated time. If you don’t pay the CCJ, the parties you owe money to can pursue further action to recover what they’re owed, such as sending in bailiffs or issuing a winding-up petition.
What happens if I don’t pay?
As a CCJ is not a criminal offence, it cannot force you to repay any debt. However, creditors can act as soon as the CCJ is issued. Whether they choose to is at their discretion.
Creditors can send debt collectors, bailiffs, or High Court Enforcement Officers (HCEOs). Alternatively, they may apply for an ‘attachment of earnings’, which will take part of your salary or benefits until your debt is repaid.
If they gain access to your home or business premises, bailiffs can take items equal to the value of your debt to be sold at auction. Each time bailiffs visit, their costs are added to your debt. They can return multiple times unless you have a legitimate reason for not paying, or the courts agree to renegotiate your payment plan.
If you wish to avoid serious creditor action, which could result in your home being repossessed, or the issuing of a winding-up petition if the debt relates to a limited company, you should contact us.
I cannot afford to pay
If you’re unable to pay the amount specified in the judgement, or the payment plan becomes unaffordable, you should inform the relevant parties as soon as possible to avoid further action. Contact the creditor who filed the CCJ to explain your circumstances; you may be able to make an alternative arrangement.
To request alterations to the payment plan, you can download an N245 form from gov.uk. When filling this out, include details of your earnings and spending to support your case. You may have to pay the court a fee to do this, and it is at the court’s discretion whether they alter the payment plan to make it more affordable for you.
If you can’t afford to pay and are unable to alter the payment plan, you could apply for an insolvency procedure.
What help is available?
If a CCJ arrives at your business premises or personal address, don’t ignore it. While dealing with it may seem daunting, and can be a costly exercise, the consequences of not addressing the issue will be more damaging than going through the formal removal process. If you’re struggling to pay off a CCJ or can’t afford to challenge one you don’t owe, you should speak to us as soon as possible. Our consultants and insolvency practitioners have years of experience in the industry, and they can advise the best way forward for you or your business. All our advice is free and impartial, with no obligation.
Help for limited companies
If your company is suffering from one or multiple CCJs, we can offer you a variety of solutions to suit your circumstances.
- Put the company into a formal repayment plan
If your core business is viable, with the potential to make a profit without its debt, your company could apply for a Company Voluntary Arrangement (CVA). These arrangements allow you to repay your creditors in monthly instalments based on what you can afford.More on Company Voluntary Arrangements
- Close your company, wiping off the debt
If a repayment arrangement isn’t viable, or more drastic action is needed, you can close the company via a Creditors Voluntary Liquidation (CVL). Doing so writes off the unaffordable unsecured debt and allows directors to make a fresh start.More on Creditors Voluntary Liquidation
- Restart the business in a new limited company
Depending on your actions as a director, you may be able to continue the business in a new limited company via a pre-pack administration. Alternatively, if the company has no future, you could explore a pre-pack liquidation. Whether these options are available depends if it’s in your creditors’ best interests.How to write off company debt and start again
Help for individuals
As a sole trader, you can be far more vulnerable than in a limited company, where limited liability protects you and your personal finances.
- Enter a formal repayment plan
If you’re struggling with CCJs, either related to your sole trader business or your personal life, we can offer an Individual Voluntary Arrangement (IVA). Like a CVA, it allows you to consolidate your debt into monthly repayments over five years.More on Individual Voluntary Arrangements
After the arrangement ends, all unpaid debt is written off, allowing you to make a fresh start free of your old liabilities.
If you can’t afford to repay your County Court Judgement (CCJ), or the creditors’ suggested payment plan is unsuitable for your circumstances, contact the creditor and attempt to modify the terms. If this isn’t possible, you should explore other debt-relief options as a method of repaying what you owe. Although CCJs cannot force you to repay your debts, if you don’t undergo formal procedures to set them aside or attempt to contact creditors, they can pursue further action to recover their money. Bailiffs may visit and take items equal to the value of what you owe, and their visits will only add to your debt.
If you respond to the CCJ and pay off the balance in full within the time limit specified in the judgement (usually 30 days from the issuing date), then it will be removed from your credit rating. However, if you ignore this, it may result in your creditor taking further action against you.
As a CCJ cannot force you to repay any debts, it might seem tempting to wait for those six years to pass and for the judgement to disappear. You can do this, but your creditors will keep chasing to retrieve their money.
In most cases, if you feel you shouldn’t pay the CCJ, you should apply to the issuing court to get it removed or set aside.
More on removing and challenging a CCJ
However, disputing a CCJ will often involve court fees, and depending on your financial standing, you may not be able to afford these charges, or paying for them will worsen your situation. If you can’t afford the court fees to dispute a CCJ, you can contact us, and one of our consultants can discuss the potential options available.
If a CCJ arrives at your premises but is not addressed to you, or anyone at that address, then you shouldn’t have to pay it to make it go away. The creditor may have sent the judgement to the wrong person, or the creditors are chasing an individual previously associated with your address.
Similarly, if you do owe a creditor money, but the amount specified in the CCJ is incorrect, you can appeal the decision by applying to have the judgement set aside.
Book a free telephone consultation with one of our initial advisers