The CCJ Process
A CCJ loan is for people who have a County Court judgement registered against them at their home or business address. While there is no actual lending product called a CCJ Loan just as there is no product called a Bad Credit Loan we use these terms to differentiate expensive loans from cheaper loans. Loans are really just specific amounts of money borrowed over a defined period of time at a given interest rate.
If you’ve been careful with your income and expenditure and have always remembered to pay your debts back at the time you are supposed to then a CCJ should be one of the furthest things from your mind. If, on the other hand you live hand to mouth from week to week and your salary never quite covers your monthly outgoings, the odds are that debt and the repayment of debt are probably never far from your mind.
A lot of people claim surprise on being informed their loan or mortgage has been turned down for ‘bad debt’ along with the subsequent revelation of a CCJ. The reality is that a CCJ is relatively hard to come by and unless you live in a travelling circus and don’t own a mobile phone there’s practically no way you can be given a CCJ without your knowledge. There’s a plethora of letters and phone calls, texts and emails to be in receipt of before anyone goes anywhere near a courtroom.
So, what’s the process? If you’ve either borrowed money or bought something on finance you will have a schedule of repayments. This means you should know when your next payment is and how much it is for. If you pay on time, no problem, but if you start to miss payments, there soon will be.
If you ring your lender and make an arrangement to reduce or suspend your payments this will normally be recorded on your credit file but as you got permission to suspend or halt it, it shouldn’t be noted as a default on the loan so your credit score will stay pretty much the same with perhaps a small drop.
Miss your payments without permission and a default will be noted on your credit file and the more months you miss the longer the default list will grow.
By this time your lender will have been trying to contact you by every way they’ve got to hand and as these days we’re nearly all contactable by post, text, email, phone call or even social media you’ll have to have been living up a mountain in a cave to convince them you didn’t know they were looking for you. If you’ve missed enough payments and broken enough subsequent agreements your lender may decide it’s time to stop giving out second chances and take you to court to get their money back.
The Process
The first thing you should receive will be a County Court Summons or a County Court Claim Form. Your first course of action on receipt should be to talk to a free debt advice charity straightaway. By this time you will have been sent at least one warning letter, a default notice and a letter telling you court action will be taken unless payment is made. You must receive a default notice at least 14 days before any court action is undertaken if it’s a consumer credit agreement and the default notice will make you aware of this as well as any imminent action and ways to avoid it.
DO NOT IGNORE THESE LETTERS. If you do ignore them the court will still go ahead and issue the judgement but won’t have been able to take your circumstances into account so you will have to repay the full amount plus costs and that will be expensive no matter the original size of the debt.
On receipt of your Summons or Claim Form and having spoken to a debt advice service you will have 3 choices about how to proceed if you can’t negotiate the debt directly with the lender. One option is to contest the debt; your adviser will help you with this. Another option is to admit the debt and give a full explanation of your finances so the court can decide how much to repay monthly or you can ask for more time than the 14 days in which to put your case.
Once you’ve decided which way to go and the court has deliberated over your ability to repay the judge will either issue a judgement by instalments where you repay monthly part of the debt til it’s repaid or they will issue a judgement forthwith whereby you are expected to repay the debt in full.
And if you still don’t pay?
The court has 3 options if you don’t pay having had the CCJ issued against you, thus starting the CCJ Process. They send in the bailiffs, they can issue an attachment of earnings order or they can give you a charging order if you are a home owner. The bailiffs can enter your home (with your permission) and take your stuff and sell it. There are certain things they can’t take but most items of value will probably be legitimately confiscated. An attachment of earnings order is pretty self-explanatory and a charging order for homeowners means they could lose their property if they don’t keep up the payments.
A CCJ will stay on your credit record for 6 years whether it is paid off or not. If paid, this will be shown on the file and will help your case in obtaining future credit as most lenders will be reluctant to look at someone with an unsatisfied CCJ whatever the reason or amount. It will be similarly difficult to get a mortgage, credit card or even open a bank account until any CCJs have been paid off.
The Best Course of Action?
The best course of action is to always pay your debts on time and if you know you are going to be late one month, get in touch with the lender and tell them. Always communicate and you’ll have a fighting chance of avoiding court action. Be as honest and open as possible about the reasons for your predicament and you may be surprised by how flexible many lenders will be.
The bottom line here is we’re all human (even lenders usually have a human face), we’ve all borrowed money at some point in the past and we also have all had problems of one kind or another which life sometimes sends to trip us or test us so there should be a degree of sympathy for another’s plight. One more tip on avoiding court action for non-payment of a loan – never have more than one running at a time. Always repay one before taking out another, no matter how tempting someone may make it appear to be. More information on the CCJ Process found here.
