– What is a CCJ?
A County Court Judgment, or CCJ, is a court order that can be registered against either an individual or a company if they fail to keep up their debt repayments. They apply in England, Wales and Northern Ireland.
Creditors generally only resort to legal action after they have sent a number of bills and reminders that have been ignored. The final communication will be a formal letter warning that if you don’t respond, legal action will commence.
If you don’t do anything, the case will proceed and if the court agrees there’s a debt to be paid, you’ll be sent a judgment containing all the details. The amount owed will now include any interest and court fees that apply. If you don’t pay within a month, then a CCJ will be recorded against you.
CCJs are recorded in the Register of Judgments, Orders and Fines, and also show on your credit record. Records of judgments remain on the Register – and also on your credit report – for six years.
– How do I pay off my CCJ?
If you are taken to court by someone you owe money to and the court agrees there is a debt to be paid, you will be sent a judgment. This will include all the relevant details you need to know, and will tell you:
- How much you owe; this will be the amount of the original debt, plus any interest or court fees that have been added.
- Who you should pay; don’t automatically assume you should send the money to the court, it is more likely you will need to pay the creditor.
- When you should pay by.
- How you should pay; if you have explained that you are in financial difficulties, the court may allow you to pay in instalments. The judgment will tell you how much and how often, and you should agree the payment method (e.g. monthly standing order) with whoever you owe.
– How can I remove a CCJ?
A CCJ will typically remain on your credit report for six years from the date it is registered. It can be removed should it be paid within 30 days of having the CCJ registered against you or where it is acknowledged by the claimant as being registered in error. We suggest you initially contact the company involved together with the credit reference agency it is registered with.
– Do I need to satisfy my CCJ before I can obtain a mortgage?
Not necessarily, no. Different lenders have different criteria, but for many the main considerations are:
- How long ago the CCJ was recorded – generally the longer ago it was, the better, but there are lenders who will consider applications from people with more recent CCJs.
- How much the CCJ was for – this, and the age of the CCJ, can affect the loan-to-value ratio a lender is prepared to offer.
- How many CCJs were recorded – one or more recent CCJs will have a bigger impact than one historical CCJ.
- What other credit problems you have had since (if any).
– What is the maximum size CCJ allowable?
Different lenders have different criteria, and they often tie the size of a CCJ to its age when making a decision. For example, a lender might ignore all CCJs over two years old, and accept two CCJs within the previous two years – provided the value is no more than £1,000 in the past year, and no more than £2,500 in the year before.
Generally speaking, the bigger the deposit you can put down, the less stringent they are likely to be.
– Does having a CCJ reduce the amount I can borrow?
Yes, it potentially can, depending on a number of conditions. As a general rule, the older the CCJ, the less impact it will have. One CCJ for a relatively small sum will likely have a lesser impact than one for a large sum, and having a number of CCJs will possibly be a bigger issue than having just the one.
The key figure for lenders is the loan-to-value ratio; the bigger the deposit you can put down or the greater equity you have, the better your chances of getting a mortgage.
– I have paid my CCJ off, why doesn’t it show as satisfied on my report?
When you pay off a debt, the creditor (or their agent) should both send you a letter confirming the debt is cleared and also notify the court, so the public record can be updated.
This won’t happen instantly, unfortunately; things take a little while to go through the system. Once the debt has been cleared, leave it a few weeks then request copies of your credit report from the main UK credit agencies – Experian, Callcredit and Equifax.
If the CCJ still isn’t showing as ‘satisfied’, you’ll need to take action. In the first instance, contact the court for advice (have the details of the judgment handy). For a small fee they can provide a certificate of satisfaction which you can show to a prospective lender while you sort out your credit report details.
Incidentally, you should make sure you have proof of payments made to your creditor so if they don’t tell the court you’ve paid, you can prove you have cleared the debt. If you paid by standing order, then bank statements should do the job.
– What happens if I ignore a CCJ?
If you ignore a CCJ, it may affect your credit rating for up to six years, and failure to pay can also lead to enforcements such as bailiff visits or even a charge against your property.