A County Court Judgment, or CCJ, is an order of the court applied for by a creditor in order to enforce a debt. The creditor is likely to have demanded repayment of the debt several times, and may feel they need to use a County Court Judgment to improve their chances of recovering their money.
If your business owes a debt and you receive a CCJ, the consequences can be serious, particularly if you fail to repay the debt within 30 days. Creditors don't typically apply to the court for a CCJ lightly, so it's important to take this action seriously and seek professional advice quickly.
Your creditor applies to the court for a County Court Judgment, and then you’re notified of the claim. Along with the notification, the court sends you a form to reply with information about the debt from your point of view.
Once they’ve received your reply the court decides whether to take the process further and issue a CCJ against your company. If this happens, you have 14 days to make your response, so what are your possible options?
Pay the debt in full within 30 days
If you can pay the debt in full within 30 days of the judgment date there will be no negative effect on your company's credit rating, and the judgment will be removed from the court’s records.
Pay the debt after 30 days
Paying the debt in full or in instalments after 30 days means that it will appear on your business’ credit file. Although the debt will be marked as ‘satisfied,’ it will remain on your credit record for six years. This will have a negative effect on your ability to borrow money as a business, as lenders use a company’s credit file to help them decide whether to sanction loans.
Cancel the CCJ
If you believe that you don't owe the debt, or know that you've already paid your creditor, you can apply to the court to have the judgment cancelled or ‘set aside.’ This course of action is also possible if you didn't receive the court notification ‐ you may have moved premises, for example, or the creditor might have used an incorrect address. This option involves a court hearing, which you'll have to attend to explain what has happened.
Refusing to pay the CCJ can quickly lead to bailiff action, and the seizure of business assets to the value of the debt (and possibly more to cover the bailiffs’ fees). County Court Judgments are also commonly used by creditors intent on forcing a business into liquidation.
This process is called compulsory liquidation, and is instigated by a winding up petition ‐ when a creditor has a proven debt that remains unpaid, they may be able to petition for the debtor business to be wound up. If a winding‐up order is granted, your business will close down following the sale of assets and you'll be investigated by the Insolvency Service.
The long‐term effects of a CCJ can be very damaging for your business. The fact that the judgment stays on your credit file for six years adversely affects your ability to borrow and obtain credit from suppliers.
For more information on County Court Judgments and what happens if you refuse to pay, please get in touch with our expert team at UK Liquidators. We offer free, same‐day consultations, and operate a broad network of offices within the UK, so you're never far away from professional help.
If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.
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