One of the tools to collect a debt in the arsenal of creditor’s collection efforts is a CCJ or County Court Judgment.
When a creditor decides to go to the courts and get a CCJ, in some instances, not all instances, they may have exhausted all the other efforts they may have tried.
It may that you have taken out a loan, or a credit card, or borrowed money in some form, then experienced a change in financial circumstances, and can no longer afford to repay the debt.
The creditor sends you notices in the post, emails, phone calls, all in an effort to recover the payments.
The account falls into arrears, it may soon then be listed defaulted on, and again depending on the creditor, and the amount of the loan, the creditor may go to the courts to seek their assistance in collecting what is owed to them.
Seeking the court’s assistance is a process, and one that you would be notified of, and when a hearing date is set with the courts, you can attend to state your case.
Just as with all accounts and things recorded on your credit history, CCJ’s stay there for a period of six (6) years.
CCJ’s are a negative mark on your credit file, and will reduce your credit score, however, if the account(s) are already in arrears or in default, your credit score has been adversely affect already.
One thing to keep in mind, if it is possible for you pay off the CCJ within 30 days, it will not be registered at the Register of Judgments, Orders and Fines. So the CCJ will not show on your credit report.
Going to Court
Obtaining a CCJ is a process, and that process begins the moment you begin to miss payments and fall into arrears.
The creditor will send you a default notice outing the details of the loan, that you are in arrears and the amount, and the notice will allow you 30 days to respond to the claim.
This notice sent you is called a “letter of claim”, it can also be called a “letter before claim”.
You may need to seek advice on how to respond to this notice, and you also do not have to respond.
Unless the creditor is willing to accept your response, and agree to a payment plan, they can still move forward with obtaining the judgment.
Your Day in Court
You can attend the court hearing, and in most instances it is best you do, it puts a face to the account/debt.
The creditor presents their case, and you can present yours.
You can explain your financial situation, and if possible, show what you can afford to pay towards the account each month; even if you have tried with the creditor prior and it was rejected.
On a side note: most creditors are willing to work with people having financial issues, especially in these times. Getting a CCJ is going to be a last resort.
After the Judge hears both sides, they render their decision, which unfortunately according to the law will be in the creditor’s favour. If they can prove you owe the debt, being unable or not being able to afford payments, is sadly not an excuse.
However, if you can make some form of repayment, while the Judge will grant the judgment/CCJ, they will allow you to make the payments you can afford, without further action being taken against you.
So you may have a CCJ, but no further action, such as in the form of an Enforcement Order.
What Are Enforcement Orders?
Enforcement Orders are what a creditor may go back to get from the courts, to enforce the CCJ, should you fail to make the agreed payments.
There are three main ways for a creditor to enforce the collection of a debt using an Enforcement Order:
- Wage attachment
- Charging Orders
Once an Enforcement Order is in place, it raises the game to a new level for collecting a debt.
Having Bailiffs sent out is not good, and it can be very scary and intimidating.
If you have seen the TV show, Can’t Pay, We’ll Take it Away, then you know. When Bailiffs show up, they are there to collect the full balance due, or begin taking possessions.
Bailiffs are bound legally and ethically to a strict set of rules, as to when they can enter your home, and also what they can seize.
You want to try to avoid this stage of the collection process.
Wage Attachments or Garnishments
This is where the creditor seeks out to attach your wages via the Enforcement Order if you are working.
The order can only take a percentage of your wages, and your employer must comply.
This collection tool not only leaves you with less income, but now your employer is aware of your situation.
Charging Orders may be used as a collection tool and part of the Enforcement Order if you own property.
A Charge is placed against your property for the balance of the debt. The Charge also turns an unsecured debt into a secured debt; one now secured by your property.
Once a Charging Order is placed against your property it sits there until the property is sold, then paid out of the proceeds of the sale.
Can a creditor and the courts force the sale of your property?
Technically yes, but the courts are not in the business of making someone homeless. It would be very rare this would occur.
As you can see, if it is all possible to avoid having a judgment or CCJ placed against you, that is the better route to go down.
And there are options to get out of debt, that help you avoid receiving a CCJ.