Dealing with CCJs

County Court Judgements (CCJs)

If you are struggling to pay your outstanding business debts, creditors, including HMRC, will commonly threaten to use the court system to obtain a County Court Judgement (CCJ) in an attempt to obtain payment. Partly this is because it is a relatively easy and often very effective way of clearing a debt. Despite CCJs being fairly commonplace when a business is having financial issues, we often find people asking, ‘what is a CCJ’ and ‘What will it mean to my business'? Naturally, they are also worried about what happens if they cannot pay a CCJ. It is probably a good idea for all directors to understand the process of a county court judgement, how it may affect your business and what you can do about them.

 

The process

Any creditors who are owed money can apply for a CCJ. The process is straightforward and can be done online and at a low cost. For example, for a £5,000 debt, the online fee is currently as little as £185.

The claim is issued, and you will receive this from the court directly. You will be given 14 days to reply; whether that is to dispute the debt, make an offer of payment, or simply pay the debt.

If a reply is not received the creditor can take the following action:

• Request a judgement.
• Once a judgement is obtained the creditor can ask the Court to enforce the judgement.
• Enforcement could be to appoint a bailiff, freeze funds in a bank account, charge property or land.
• Move forward to a winding-up petition.

How can a CCJ affect your business?

If a creditor has a CCJ it will have the following implications.

• The CCJ will be placed on a public register so will be seen by credit rating agencies.
• This will impact your credit rating.
• This may affect the business’s ability to obtain funding.
• It may impact your ability to set up credit terms with new suppliers.

What can I do?

Firstly you need to act quickly because, as you can see, the effects on your business are serious. If you have a creditor who is threatening a CCJ under no circumstances ignore it.

Some options are:

• First, talk to your creditor and see if you can arrange a payment plan.
• If you do not owe the money or there is a dispute, you can write to the Court with details of the dispute.
• A common dispute is that the CCJ has been issued in the wrong name. It is, therefore, important to carefully review all the paperwork. We have seen situations where a creditor has issued a claim in the personal name of the director rather than the Company.
• This will lead to a Court hearing to review the dispute.
• Please note that if the value of your dispute is less than the amount owed, even if you dispute the claim and are successful, the Court can still grant a CCJ for the undisputed sum.
• If a judgement has already been granted you can apply to the Court to have the judgement set aside.
• You can make an offer to pay in instalments.

CCJs are often an indication of a wider issue and need to be dealt with appropriately. We are happy to discuss this with you further and offer a free 20 minute initial call to talk through your problems.