Got a CCJ? What to do if you're threatened with court action over your debts

County Court Judgements are on the rise, according to new figures from Registry Trust. There were 5% more CCJs issued in January to March this year compared to the same period in 2015.
By The Newsroom
Published 10th May 2016, 15:03 BST
Updated 10th May 2016, 16:06 BST
Picture: PAPicture: PA
Picture: PA

So, what can you do if you receive a letter threatening court action and a possible CCJ because of your outstanding debts? The good news is that there are ways to get back in control of your finances and stop your debt problem ending this way.

What exactly is a CCJ?

A CCJ is issued when you fail to reach an agreement with the people you owe money to. So, you can get one if you fall behind with payments on bills such as electricity, gas or water, or with repayments, for example on loans or credit cards. You’ll usually have to fall a few months behind before your lender or service provider will start court action against you.

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If a CCJ is granted against you, it means that the court has judged that you owe a certain amount of money and that you must pay it back. It will also tell you when and how you should do this.

How serious is a CCJ?

If a CCJ is made against you, it’s important to stick to its terms. If you don’t, the firm can take enforcement action to try and get back the money you owe it. This includes things like taking money straight out of your wages or through bailiff action.

A CCJ will also damage your credit history and, unless you pay the CCJ within a month, it will stay on your credit history for six years. This could make it more difficult or more expensive to borrow in the future.

How do I stop getting one?

The good news is you don’t have to let things get to this point - your lender or service provider will always give you a warning legal action will start. So what should you do if you’ve been warned about court action?

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Most importantly, stay in contact with your lender or service provider. A big reason these situations end up in court is because the person who owes the money doesn’t keep the firm informed. So make sure you open, read and respond to any letters or emails they send you.

While it might feel daunting, it is also important to speak to the company you owe money to in order to let them know why you’re having trouble paying them back. If you explain that you are in financial difficulties you may be able to come to an arrangement with them that makes paying the debt more manageable for you, like reducing your payments for a while, giving you a payment holiday or freezing interest and charges.

Second, make sure you get expert advice. There are debt solutions designed to help people in a range of different circumstances beat problem debt and get back on track with their finances. There’s plenty of help and advice available for people in financial difficulties – such as the Money Advice Service, which has lots of info about CCJs and money issues in general.

Debt Advisory Centre: 0161 871 4881